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Feels like a rate hike doesn't cause as much pain relative to the elation that occurs with a rate cut. If rates move up to 5+ or 6 percent, and then move back

Feels like a rate hike doesn't cause as much pain relative to the elation that occurs with a rate cut. If rates move up to 5+ or 6 percent, and then move back down to 4 or 3, the market will explode up. Not saying that will happen, it's just interesting.

gregw134 4y ago
It's going to be painful, it's just expected pain.
westpfelia 4y ago
It sure hurts me. My student loans are pegged to the federal interest rates. I went from like 4% to as of today nearly 10%
- irrational 4y ago
  Same with my HELOC.
- bushbaba 4y ago
  Something to note is that Federal student loans are paused. I've wondered if the government can resume requiring payments without causing a massive recession.
  - UncleOxidant 4y ago
    Payments are paused, but does interest still accrue?
    - ModernMech 4y ago
      No.
- Forgeties79 4y ago
  If you’ve been setting aside what you would have paid while the interest was frozen, you could have a decent little pile that should insulate you for a while. I have friends who said the pause is approaching a point where it’s more valuable to them than the cancellation at this point. I’m not saying that’s definitely the case for you, and I’m guessing you’ve already thought about this, but figured I would throw it out there. Sorry you have to stress about this.
  - thwayunion 4y ago
    > I have friends who said the pause is approaching a point where it’s more valuable to them than the cancellation at this point. How is this possible?
    - DiggyJohnson 4y ago
      If the amount of accrued interest that's been avoided by the pause is greater than 10k, I presume.
      - thwayunion 4y ago
        I get that, of course, but the only paused/forgivable loans were subsidized, which have known and non-predatory interest rates... so that means they accrued hundreds of thousands in student loan debt... my question remains "how?!" I always figured the "x00K in student debt" stories were people who took out a lot of non-subsidized loans and let interest accrue for years.
        mrep 4y ago
        Can you get those loans for grad school/dental school cause my girlfriends dental schooling was over 100k a year so easy peasy if so.
    - teg4n_ 4y ago
      I guess if it’s simply paused forever instead of forgiven you don’t have to pay tax on the forgiven amount?
JumpCrisscross 4y ago
> a rate hike doesn't cause as much pain relative to the elation that occurs with a rate cut Expectations and state dependence [1] are important in linking rate changes to the stock market. [1] https://www.gla.ac.uk/media/Media_240525_smxx.pdf https://www.gla.ac.uk/media/Media_240525_smxx.pdf
rapsey 4y ago
Rates will stay up until the reaction to a cut would be non-plussed dismay.
gjsman-1000 4y ago
I've watched my Savings Account APY go from 0.4% last year to 3% - before this latest hike. Still pretty bad compared to inflation. On the other hand, is it just me, or is the Fed really addressing a symptom and not the cause? Sure, inflation will be finally squelched, but the housing market will be on life support because of the absurd rates, coupled with already absurd prices even if the increases have ceased. Fix that, and inflation will come roaring back...?
- vkou 4y ago
  > but the housing market will be on life support because of the absurd rates. The housing market should have been taken out back and shot decades ago. There's no universe in which a dwelling in a proper city[1] can cost a million dollars, while median wages are in the 50-60k range, and low-class wages are 35-40k. You can't have housing be affordable to normal people and also be a profitable investment. One of these has to give. [1] Houses in third-tier and fourth-tier cities (medium income closer to 30k) - the kind of places that everyone with means wants to get the hell out of - are going for 300k+.
  - cjbgkagh 4y ago
    It can exist so long as the middle class still have wealth to plunder, which is the real point of financializing housing. These distortions will be maintained so long as they serve that purpose. With millennials and later generations being largely unable to build wealth the middle class is on its way to being tapped out.
paulpauper 4y ago
It is all about expectations. THs is why CPI is so important.

gregw134 4y ago

It's going to be painful, it's just expected pain.

westpfelia 4y ago

It sure hurts me. My student loans are pegged to the federal interest rates. I went from like 4% to as of today nearly 10%

irrational 4y ago
Same with my HELOC.
bushbaba 4y ago
Something to note is that Federal student loans are paused. I've wondered if the government can resume requiring payments without causing a massive recession.
- UncleOxidant 4y ago
  Payments are paused, but does interest still accrue?
  - ModernMech 4y ago
    No.
Forgeties79 4y ago
If you’ve been setting aside what you would have paid while the interest was frozen, you could have a decent little pile that should insulate you for a while. I have friends who said the pause is approaching a point where it’s more valuable to them than the cancellation at this point. I’m not saying that’s definitely the case for you, and I’m guessing you’ve already thought about this, but figured I would throw it out there. Sorry you have to stress about this.
- thwayunion 4y ago
  > I have friends who said the pause is approaching a point where it’s more valuable to them than the cancellation at this point. How is this possible?
  - DiggyJohnson 4y ago
    If the amount of accrued interest that's been avoided by the pause is greater than 10k, I presume.
    - thwayunion 4y ago
      I get that, of course, but the only paused/forgivable loans were subsidized, which have known and non-predatory interest rates... so that means they accrued hundreds of thousands in student loan debt... my question remains "how?!" I always figured the "x00K in student debt" stories were people who took out a lot of non-subsidized loans and let interest accrue for years.
      - mrep 4y ago
        Can you get those loans for grad school/dental school cause my girlfriends dental schooling was over 100k a year so easy peasy if so.
  - teg4n_ 4y ago
    I guess if it’s simply paused forever instead of forgiven you don’t have to pay tax on the forgiven amount?

JumpCrisscross 4y ago

> a rate hike doesn't cause as much pain relative to the elation that occurs with a rate cut Expectations and state dependence [1] are important in linking rate changes to the stock market. [1] https://www.gla.ac.uk/media/Media_240525_smxx.pdf https://www.gla.ac.uk/media/Media_240525_smxx.pdf

rapsey 4y ago

Rates will stay up until the reaction to a cut would be non-plussed dismay.

gjsman-1000 4y ago

I've watched my Savings Account APY go from 0.4% last year to 3% - before this latest hike. Still pretty bad compared to inflation. On the other hand, is it just me, or is the Fed really addressing a symptom and not the cause? Sure, inflation will be finally squelched, but the housing market will be on life support because of the absurd rates, coupled with already absurd prices even if the increases have ceased. Fix that, and inflation will come roaring back...?

vkou 4y ago
> but the housing market will be on life support because of the absurd rates. The housing market should have been taken out back and shot decades ago. There's no universe in which a dwelling in a proper city[1] can cost a million dollars, while median wages are in the 50-60k range, and low-class wages are 35-40k. You can't have housing be affordable to normal people and also be a profitable investment. One of these has to give. [1] Houses in third-tier and fourth-tier cities (medium income closer to 30k) - the kind of places that everyone with means wants to get the hell out of - are going for 300k+.
- cjbgkagh 4y ago
  It can exist so long as the middle class still have wealth to plunder, which is the real point of financializing housing. These distortions will be maintained so long as they serve that purpose. With millennials and later generations being largely unable to build wealth the middle class is on its way to being tapped out.

paulpauper 4y ago

It is all about expectations. THs is why CPI is so important.