Buyers are not impressed though…
Everybody say recession imminent because of inverted yield. So wait
Mortgage-Refi Fever Sweeps U.S., Forcing Brokers to Scramble
With rates at their lowest since 2016, homeowners pile in
Banks’ mortgage-lending units are smaller, brokers are swamped
I think interests rates 10 years from now will be a lot higher than today. Some people may have taken low interests rate for granted if you look at the 30 year rates. China’s population is aging super fast and old people draw down their savings. Bernanke’s “global savings glut” will go into reverse fast in the next 10 years. Better take advantage of the low rates while it last. They may not be going away in a year but I would be very surprised if rates are still lower than 4% in 2030.
Manch, I’m not so sure.
There is an argument that western liberal democracies + Japan have become dependent on low interest rates to support their burgeoning social programs. The US is not quite there yet but if Bernie/Warren is elected it could happen quickly. The risk is that we become trapped (or to use an analogy, addicted) in a cycle of perpetually low rates. It’s hard to predict how it will end and what the unintended consequences will be. I am very much a layperson, but I’m not aware of other situations in history where negative real interest rates were so widespread.
Rates have trended lower since the US went off the gold standard. Every economic cycle has a lower peak interest rate then the prior one. Every recession has a lower bottom than the prior one. The next recession could bring negative interest rates. Globally, there’s already $15T of bonds that have negative yields.
Household savings rate has also been declining. I don’t buy the savings glut.
These investors are funding the low interest rates? Are these governments(i.e. backed by sovereign) or primarily non govt?
It is mostly the debt of European countries. I’m amazed people think they are less risk than the US. My thought is people in European countries that are a mess buy debt of stable countries.
The west and japan may be addicted to low rates, but that doesn’t mean they will get them. Technology and globalization, aka China, have worked together to push rates low and keep them low. If China’s current account turns negative, which can happen within the next 5 years, rates can turn higher. Just my layman guess.