Have we entered a new era of structurally higher interest rates? Including Poll!

[Luca]

Thought it would be interesting to see what the consensus of the board is regarding interest rates. @Viking opened a great thread about it and i think its a very interesting topic to discuss. 

 

Edited June 11, 2023 by Luca

[gfp]

Which interest rate are you asking about?  The Fed Funds target or the 10 year US Treasury or what?

[Luca]

1 minute ago, gfp said:

Which interest rate are you asking about?  The Fed Funds target or the 10 year US Treasury or what?

Federal Funds Rate

[Gregmal]

The past decade was in response to GFC. Perhaps it was overdone, but that’s why it was like that. Going forward it’s just gonna be normal like pre GFC type environment. It’s just doesn’t seem normal to most people now because they’ve convinced themselves post GFC was normal and it wasn’t.

Edited June 11, 2023 by Gregmal

[ValueArb]

https://www.macrotrends.net/2016/10-year-treasury-bond-rate-yield-chart

 

Since 1962 the average 10 year treasury rate has been 5.88%. Given our current national debt is far higher than it's every been during that period, my super simple "two factor" macro model says future 10 year treasury rates must be higher (on average). 

[Viking]

My guess is the Fed funds rate will average around 3.5-4% over the next 5 years. Of course two of the key variables will be inflation and economic growth. My guess is the Fed will have a hard time getting inflation to and keeping it at its 2% target. The future path of the economy is impossible to predict with and accuracy. As a result, i do not have a high degree of confidence in my forecasting ability looking 5 years out (my degree of confidence is actually quote low). And i am certainly not making any investment decisions today based on what i think the world will look like in 5 years time.