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I don't believe his assertion #1 is 'a done deal', though he
Posted on: June 21, 2025 at 12:51:16 CT
JeffB MU
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*may* be right.
I do not see anything precluding a Fed induced drop in mortgage rates, and we're seeing European countries lowering interest rates as we "speak".
1. The 40+ year cycle of interest rates / bond yields has turned. Rates will not go back to zero and stay flatlined for years. Risk and inflationary forces have changed and are not returning to The Great Moderation.
It may not stay flatlined for years at zero, but it could certainly drop from current levels. If the bubble bursts, I would expect the Fed to jump in to intervene with suppressed interest rates for as long as it took to moderate risks and pain in the economy... tempered by any inflationary pressures, of course.
I do not see anything precluding a Fed induced drop in mortgage rates, and we're seeing European countries lowering interest rates as we "speak".
1. The 40+ year cycle of interest rates / bond yields has turned. Rates will not go back to zero and stay flatlined for years. Risk and inflationary forces have changed and are not returning to The Great Moderation.
It may not stay flatlined for years at zero, but it could certainly drop from current levels. If the bubble bursts, I would expect the Fed to jump in to intervene with suppressed interest rates for as long as it took to moderate risks and pain in the economy... tempered by any inflationary pressures, of course.
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I don't believe his assertion #1 is 'a done deal', though he - JeffB MU - 6/21 12:51:16