Mortgage Blog

Rate trends for the next a few months -- ZT

November 13th, 2015 9:13 AM by Eric Fang

Shorter term (1-2 months) pressure is expected to be negative for rates.  It will probably be hard to piece together any significant rally before the December Fed Hike--err... I mean Fed meeting.  After that, paradoxes reign supreme as longer term rates will be more free to act of their own free will--much like the falling rates that followed the Fed hike in 2004.  This might not mean that rates will fall--only that they're free to follow the trends in economic data and inflation.  Eventually, I think they'll fall.  I think that's the only endgame that makes sense.  It makes all the more sense because the preponderance of opinions/forecasts/etc call for rising rates from here on out.  You just have to decide how screwed you think the global economy will be in the longer term.

Yes, we might see rising rates for the next few months.  But in order for rates to continue to rise, we'd have to see something that we're not likely to see: an economy that continues to support increasing levels of growth despite rising short term rates, as well a a global economy that can weather the storm of a Fed rate hike cycle.  This is too much to ask of any economy this far into a growth cycle, but especially of this one with its vast wealth inequality. Make friends with someone who owns some robots. 

Posted in:General
Posted by Eric Fang on November 13th, 2015 9:13 AM

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