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2015 the year of the interest rates

  1. thorburn

    10,119 Posts.

    Shannon Sands:

    "There’s much talk about interest rates these days. The question on most people’s minds is when will the Fed actually move to increase rates, and what impact will that have across financial sectors?
    The general consensus is that interest rates must and will go up sooner rather than later, giving a much-needed boost to long-term investors and bond holders who have been suffering in an ultra-low-yield environment."

    This type of commentary seems to reflect the consensus view of many commentators and therefore their readers.

    With the release of the soft GDP numbers the headline premise seems to cover the facts:

    that there is little to no inflation in the US, that

    the US economy is still anemic,

    that low paid part time and casual jobs take up most of the positive pressure of unemployment,

    that low oil prices aren't a cause for inflation,

    that corporate profits are now showing the effects of a high USD.

    So as well as asking how higher interest rates will effect the financial it's about time that the obvious questions to ask are:

    what happens to financial markets if the FED can't raise rates this year?

    What effect will that have on the bond market?

    Could we be looking at negative bond yields in the US in the future?

    Will holding rates or even dropping them to negative reverse markets?

    And therefore the most basic and important question: are the main Central Banks losing control?

    Are we entering a period of financial kaos, unlike anything ever experienced?

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