That abnormal flat rate line is courtesy of the big Central Banks.
Abnormalities will cause abnormalities. Low interest rates, apart from cyclical trends, are primarily caused by deflationary forces and the intent of the Central Bank to negate the effect. Deleveraging of debt has been the chief cause of deflation but it is quite complex.
So after a period of low deflation induced interest rates you'd expect rising rates but that is not necessarily the case.
Quantitative easing is experimental. The effects are not fully known nor understood.
However this increase in interest rates in the US, in a world with low rates, will raise the USD and import some degree of deflation. Something of a seesaw mini cycle.
Rates could well go down again. The Central Banks are caught in the intrigues they have made.
But should rates continue to rise they could so in small increments. Initial market reaction should be over reaction. Once QE is finalised next month markets will become very volatile. The comfy QE cushion has been taken away and markets won't like it one bit. I still believe that we haven't had the yearly correction yet and two things are highly possible by years end:
rates get to ~3%
and a large market dummy spit.
Which leads me to look at a short position over European markets.
