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CaptainGrumpy

4,596 Posts.

177

02/07/18

09:42

Post #: 34074255
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Originally posted by 3500 ↑

How Interest rates correlate with markets tops & bottoms.
We are at the very early stages of tightening cycle....Many places including ours haven't even started yet.
In the US there very tight labour market & interest rates are heading up for the next couple of years at least to combat demand pull inflation which is bound to surface.
Other countries will eventually follow suit.
It is noticeable that interest rates have generally been on steep downward trend for the last 3 decades.....I don't expect it to peak above 5%.....Perhaps ever.....long gone are rates >15%
Are we at a new era of lowish rates.
Here is graph of interest rates compared to market tops & bottoms since 1993....."Crashes" seem to happen at peaks of rates cycle......How far are we from the tightening peak.
Could a crash happen with rates at the extreme bottom.....Unlikely.....Unless central banks restart another round of easing.....Don't see this happening.
Here is a graph of interest rate compared to market tops & bottoms since 1993....Would be interesting to see the longer term one over the last 100 years. View attachment 1171614 View attachment 1171614

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Long yields in the US is an extremely crowded trade. You could mount a case that they are in the process of peaking (although that seems silly in the context of your graph). Thinking about it at the simplest level, I don't know how all the sovereign debt created over the last decade can be serviced at materially higher levels

Last edited by CaptainGrumpy: 02/07/18

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