All this may be irrelevant if interest rates don’t go up after all. Forecasters have been predicting interest rate increases for so long now and have been wrong. Tonight in premarket trading the 10-year bond is down to 1.83%.
At the beginning of 2014 it was at 3% and all predictions were for it to go to 4% by the end of 2014. Instead, it went down to 2%. At the beginning of 2015 most predictions were for it to go up throughout the year. Instead, it is falling, and I don’t see it above 2% at year end.
The reason is primarily a weak economy. The latest figures on a whole slew of economic indicators are pointing to a nearly flat economy this year: job creation, wage stagnation, weak exports due to a strong dollar, the rest of the world flat or in recession, weak consumer spending despite the gift of plummeting oil prices (thank you, fracking) to our family budgets, the list of bad news so far in 2015 goes on. Some economists say we are already in a recession.
The weak economy will convince the Fed to not take the punch bowl away for quite some time.
