5 ms·

>Anyone who thinks the FED will lower rates next year is delusional. Literally nobody thinks that.

amock 4y ago
https://www.morningstar.com/articles/1106505/why-we-expect-the-fed-to-cut-interest-rates-in-2023 https://www.morningstar.com/articles/1106505/why-we-expect-t...
raesene9 4y ago
https://www.morningstar.co.uk/uk/news/225468/federal-reserve-hikes-but-will-it-cut-in-2023.aspx https://www.morningstar.co.uk/uk/news/225468/federal-reserve... - no quite no-one...
mywittyname 4y ago
Maybe I'm delusional, but I think the Fed is raising rates just so they can lower them again. Look at what happened to rates between 16-19. They slowly raised rates in little baby steps, but the moment the 2019 economy started to weeble-wobble, they cut rates almost in half. And when the economy fell over in 2020, they cut rates back down immediately. It took them 3 years to raise rates from 0.13% to 1.70%, but less than a month to go from 1.60% to 0.05% https://www.macrotrends.net/2015/fed-funds-rate-historical-chart https://www.macrotrends.net/2015/fed-funds-rate-historical-c...
- wuliwong 4y ago
  I saw this a couple weeks ago too. This could be the first time in around 40 years that they are able to raise interest rates higher than the previous peak before having to cut them.
- dragonwriter 4y ago
  > Look at what happened to rates between 16-19. They slowly raised rates in little baby steps, but the moment the 2019 economy started to weeble-wobble, they cut rates almost in half. Yes, raising rates to control inflation during an expansion and then cutting them when the economy weakens is... pretty exactly the usual simplified distillation of “things are behaving as normal” monetary policy. As is greater caution in raising rates (which fights inflation but slows the economy, with the downside risk of triggering/magnifying recession) vs. cutting rates (which stimulates expansion but risks inflation.) Not sure why you are pretending this totally conventional wisdom description is some kind of contrarian hot take.
tmn 4y ago
A lot of people think that. I’m not saying I agree, but it’s a pretty popular take in macro circles on YouTube.
- RappingBoomer 4y ago
  it's a mass delusion on wall Sr that rates will have to be lowered soon...but history shows that inflation is sticky
ac29 4y ago
The yield on a 1yr treasury was higher yesterday than on a 2yr, which suggests that the market certainly thinks cuts next year are more likely than not. edit: link to data: https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202208 https://home.treasury.gov/resource-center/data-chart-center/... edit2: for the visidata users: vd 'https://home.treasury.gov/resource-center/data-chart-center/interest-rates/daily-treasury-rates.csv/all/202208?type=daily_treasury_yield_curve&field_tdr_date_value_month=202208&page&_format=csv https://home.treasury.gov/resource-center/data-chart-center/...'
shapefrog 4y ago
The market is pricing this outcome. May 2023 onwards fed funds are expecing cuts not hikes.

https://www.morningstar.com/articles/1106505/why-we-expect-the-fed-to-cut-interest-rates-in-2023 https://www.morningstar.com/articles/1106505/why-we-expect-t...

raesene9 4y ago

https://www.morningstar.co.uk/uk/news/225468/federal-reserve-hikes-but-will-it-cut-in-2023.aspx https://www.morningstar.co.uk/uk/news/225468/federal-reserve... - no quite no-one...

mywittyname 4y ago

Maybe I'm delusional, but I think the Fed is raising rates just so they can lower them again. Look at what happened to rates between 16-19. They slowly raised rates in little baby steps, but the moment the 2019 economy started to weeble-wobble, they cut rates almost in half. And when the economy fell over in 2020, they cut rates back down immediately. It took them 3 years to raise rates from 0.13% to 1.70%, but less than a month to go from 1.60% to 0.05% https://www.macrotrends.net/2015/fed-funds-rate-historical-chart https://www.macrotrends.net/2015/fed-funds-rate-historical-c...

wuliwong 4y ago
I saw this a couple weeks ago too. This could be the first time in around 40 years that they are able to raise interest rates higher than the previous peak before having to cut them.
dragonwriter 4y ago
> Look at what happened to rates between 16-19. They slowly raised rates in little baby steps, but the moment the 2019 economy started to weeble-wobble, they cut rates almost in half. Yes, raising rates to control inflation during an expansion and then cutting them when the economy weakens is... pretty exactly the usual simplified distillation of “things are behaving as normal” monetary policy. As is greater caution in raising rates (which fights inflation but slows the economy, with the downside risk of triggering/magnifying recession) vs. cutting rates (which stimulates expansion but risks inflation.) Not sure why you are pretending this totally conventional wisdom description is some kind of contrarian hot take.

tmn 4y ago

A lot of people think that. I’m not saying I agree, but it’s a pretty popular take in macro circles on YouTube.

RappingBoomer 4y ago
it's a mass delusion on wall Sr that rates will have to be lowered soon...but history shows that inflation is sticky

ac29 4y ago

The yield on a 1yr treasury was higher yesterday than on a 2yr, which suggests that the market certainly thinks cuts next year are more likely than not. edit: link to data: https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202208 https://home.treasury.gov/resource-center/data-chart-center/... edit2: for the visidata users: vd 'https://home.treasury.gov/resource-center/data-chart-center/interest-rates/daily-treasury-rates.csv/all/202208?type=daily_treasury_yield_curve&field_tdr_date_value_month=202208&page&_format=csv https://home.treasury.gov/resource-center/data-chart-center/...'

shapefrog 4y ago

The market is pricing this outcome. May 2023 onwards fed funds are expecing cuts not hikes.