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Every single interest rate chart I am looking at seems to be saying the same thing: lower rates, dead ahead, and for years to come. People will think this is great news, but it isn’t. Rates aren’t dropping because banks want to be nice. They’re dropping because the economy is heading for a brick wall.
Following Powell’s surrender on Friday, a glance through the charts seems to strongly support the prospect that rates across the board are going to drop substantially. I do not pretend to be an interest rate expert, but it seems to me shorter-term rates will be more prone to weakening than, let’s say, the thirty year. Almost all the charts below have a similar setup: a sharp rise in rates, a rounded top, and what appears to be the beginning of a drop. Here we have the 10-year rates:
I’ve got to say, this fund of treasury bonds is looking better by the way. If IEF can clear the top of its basing pattern at about 96.26, this thing should blast higher.
It seems most likely that, a year from now, interest rates will be substantially lower based on these nearly-completed reversal tops.
I vividly remember how hard it was for my dad to make his mortgage payment back in the early 1980s. I didn’t understand why at the time, but let’s face it – – can you IMAGINE if everyone’s mortgage rate these days suddenly was at 18%?
