5 ms·

So... its time to raise interest rates?

by zeckalpha 11y ago

JonFish85 11y ago
I'm quite curious to see whether that'll happen before the elections...
- uptown 11y ago
  Next month. Bet on it.
  - epistasis 11y ago
    What are the best ways to bet on it, in terms of where to put money now?
    - Gibbon1 11y ago
      Mattress
    - Tycho 11y ago
      I think the simplest thing would be sell Euros and buy Dollars.
      - um_ya 11y ago
        No, if there is another economic collapse, the fed will do more QE, which devalues the dollar. The best is to buy gold with your Euros.
        redtexture 11y ago
        But the world at the same time would migrate to dollars with liquid funds, causing for the near-term a drop in prices of other currencies in relation to the dollar.
    - use_fed_funds 11y ago
      The actual best way to bet on the event is to use fed fund futures http://www.cmegroup.com/trading/interest-rates/stir/30-day-federal-fund.html http://www.cmegroup.com/trading/interest-rates/stir/30-day-f... which are a futures contract whose value is determined by the fed funds rate (the rate people refer to when they talk about raising interest rates)
      - nohuck13 11y ago
        Their interesting feature is that you can imply the probability of a rate hike in December/January/March/... from the yield curve. It's 66% for December: http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html http://www.cmegroup.com/trading/interest-rates/countdown-to-...
  - WalterBright 11y ago
    It's likely already factored into the stock prices.
oldpond 11y ago
That can't happen without crashing the entire system. Interest rates are effectively zero because everyone (governments, businesses, citizens...) is carrying all the debt they can handle. If they try to raise the interest rates the entire world will go bankrupt. As usual, Bloomberg points the finger at bank regulation. The banks should never have survived the 2008 crash, but $2.5Trillion buys you a lot of time. Remember, all that QE went to pay down financial sector losses from the crash. It didn't do anything to ease the debt logjam.

So... its time to raise interest rates?

JonFish85 11y ago

I'm quite curious to see whether that'll happen before the elections...

uptown 11y ago
Next month. Bet on it.
- epistasis 11y ago
  What are the best ways to bet on it, in terms of where to put money now?
  - Gibbon1 11y ago
    Mattress
  - Tycho 11y ago
    I think the simplest thing would be sell Euros and buy Dollars.
    - um_ya 11y ago
      No, if there is another economic collapse, the fed will do more QE, which devalues the dollar. The best is to buy gold with your Euros.
      - redtexture 11y ago
        But the world at the same time would migrate to dollars with liquid funds, causing for the near-term a drop in prices of other currencies in relation to the dollar.
  - use_fed_funds 11y ago
    The actual best way to bet on the event is to use fed fund futures http://www.cmegroup.com/trading/interest-rates/stir/30-day-federal-fund.html http://www.cmegroup.com/trading/interest-rates/stir/30-day-f... which are a futures contract whose value is determined by the fed funds rate (the rate people refer to when they talk about raising interest rates)
    - nohuck13 11y ago
      Their interesting feature is that you can imply the probability of a rate hike in December/January/March/... from the yield curve. It's 66% for December: http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html http://www.cmegroup.com/trading/interest-rates/countdown-to-...
- WalterBright 11y ago
  It's likely already factored into the stock prices.

oldpond 11y ago

That can't happen without crashing the entire system. Interest rates are effectively zero because everyone (governments, businesses, citizens...) is carrying all the debt they can handle. If they try to raise the interest rates the entire world will go bankrupt. As usual, Bloomberg points the finger at bank regulation. The banks should never have survived the 2008 crash, but $2.5Trillion buys you a lot of time. Remember, all that QE went to pay down financial sector losses from the crash. It didn't do anything to ease the debt logjam.