Opinion on Interest Rates status going forward

[FREE866]

You and 99% of the rest of us. Times like this makes me glad I'm 100% in fixed income.

Ironically, it's time like this I'm content with being at 100% equity ( actually technically its 98%) and all in ETFs!

 

[Car-Guy]

Ironically, it's time like this I'm content with being at 100% equity ( actually technically its 98%) and all in ETFs!

I understand, different strokes for different folks. I made my switch mid summer 2022 from equities to 100% fixed income. Never in my life have I ever been so at peace with my financial investments as I am now. When fixed income rates drop too much I may rethink that, but if rates hold like this just a few more years I won't care.

 

[street]

Ironically, it's time like this I'm content with being at 100% equity ( actually technically its 98%) and all in ETFs!

I'm on the same wavelength as you. Don't panic relax and ride it out. It might be a long ride but if you don't the money, I think a person can be a lot more at ease.

 

[kongmen]

Very true and it "was" very unfair IMO. As someone said earlier on this thread or another, even today's rates don't keep up with inflation, but it certainly takes a lot of the sting out.

I don't see how it takes the sting out of anything. If inflation is 7% and you get 5% it's the same as inflation at 3% and you get 1%.

 

[Montecfo]

Interesting. The 4% to 6% line is broadly consistent with Vanguard's most recent 10 year outlook which has US aggregate bonds at 4.0%-5.0% and US Treasury bonds at 3.6%-4.6% and US equities at 3.7%-5.7%.

https://advisors.vanguard.com/insights/article/series/market-perspectives#projected-returns

It addresses that equities can do well with interest rates relatively low or high.

What it does not address is the impact of interest rate changes to stock values, which is unambiguously negative.

 

[Chuckanut]

Here is one person’s feelings on future interest rates. The article discussed the neutral interest rate.

High Rates Appear On Track To Persist Long-Term

Amid the debate over whether and when the Federal Reserve cuts intere

wallstreetjournal-ny.newsmemory.com

A few quotes for those blocked by the paywall.

At issue is the neutral rate of interest: the rate that keeps the demand and supply of savings in equilibrium, leading to stable economic growth and inflation.

Every quarter, Fed officials project the longer-run interest rate, which is, in effect, their estimate of neutral. Their median estimate declined from 4.25% in 2012 to 2.5% in 2019. After subtracting inflation of 2%, that yielded a real neutral rate of 0.5%.

In March, nine of 18 officials put neutral above 0.5%. Two years earlier, just two did. Cleveland Fed President Loretta Mester said after years of penciling in a long-run rate estimate of 2.5%, she revised her projection last month to 3%.

Others are skeptical that neutral is rising. New York Fed President John Williams, who co-wrote a widely followed model of r-star, has said he expects an aging global workforce that boosts savings to keep neutral low.