Interest Rates Firm in the 1.52% – 1.57% Area

The stock market is spiking as the folks in DC kick the can down the road for a couple months.

Interest rates (as depicted by the 10 year treasury) are up 4 basis points to 1.565%—waiting, no doubt, for the employment numbers tomorrow and further waiting for the CPI and PPI number next week.

It is doubtful that employment numbers will do much to interest rates, although if the number is as bad as last month the talking heads will pose the question ‘will the Fed have to delay the tapering announced?’ Last month (August), as you recall, only 235,000 jobs were created with expectations for around 700,000. For September around 500,000 new jobs are expected.

On the other hand the inflation numbers next week could give interest rates a shove either way–back down into the 1.40’s if numbers were very soft (can’t imagine that) or boost them into the 1.60%’s if they run hot. We’ll see – not one thing I can do to buy/sell in anticipation of what the number will be – just hold tight.

8 thoughts on “Interest Rates Firm in the 1.52% – 1.57% Area”

  1. “Give me a one-handed Economist. All my economists say ‘on hand…’, then ‘but on the other…”

    ― Harry Truman

    The LT brothers A, L, and H are still stinkin’ up the joint. Ignoring for now unless a fundamental change occurs.

    PM’s started moving late this week. About a third to half of my PM CEFs/stawks unrealized losses disappeared. Poof! Expecting liftoff as we move into Q4 and Q1.

    KHYB has yet to find a bottom. I have been slowly averaging in so no biggie for now.

    BOT – All buys at par or under for BB/Pfd
    10.4.21 AAICPRB, RISN, ECF, IMBIL, KHYB, OVM, PBIPRB
    10.5.21 BCV, KHYB
    10.6.21 BTI, JHI, PRIFP
    10.7.21 METPRA
    10.8.21 KHYB, PRIFP, AAICPRB

    SLD – All sells at profit or penny over cost for BB/Pfd
    10.4.21 OXLCL (rest of the order filled from previous week)
    10.6.21 PRIFPRI (swapped into PRIFP)
    10.7.21 SACHPRA (still holding most of shares from IPO purchase)

      1. Hi CM,

        I own the following CEFs;

        ASA – mining stocks
        SPPP, PHYS, PSLV, CEF – rocks in a box (bullion in a vault)

  2. Just for perspective: Many years ago I sat across from George Soros at dinner and asked him if there was anything he would not bet on. He thought for a bit and said “interest rates.”

  3. Interest rate forecasts have always been just that….forecasts. Even the dot plots haven’t hit the side of the barn for years and years. “Don’t fight the Fed”….except the Fed is fighting the Fed.

    I know one place that was calling for lower rates as pushed higher, and they did finally go lower. Now they are calling for higher. While I’m long all I can say is I HOPE SO because 0.0002 mm yields/ nothing up front are brutal. It’s stealing money by the fed and dc

  4. On one hand, the two outgoing Fed members are relatively hawkish and will likely be replaced by more dovish members. OTOH, with all the stock trading scandals, Powell is going to try and show that he’s not beholden to the stock market (like in 2018 and we all remember how that turned out — market went south, Treas Sec “had” to convene the Plunge Protection Team on 12/23 and market bottomed on 12/24 with Powell caving on rates shortly thereafter).

  5. I personally think the Fed will either ignore tapering soon or find ANY reason to delay tapering. You can certainly find enough headwinds just in article titles for tapering to be minimized or delayed. Anything beyond 1.7-1.8% on the ten year yield will have red alert alarms buzzing.

    I also don’t see politicians killing the stock market right before midterm elections.

  6. The Fed is currently under pressure because of front-running investments by 2 Fed members who have since resigned. Also, the Fed chairman wants to be re-appointed when his term expires. I think if the 10-year T-note turns sharply higher due to inflation concerns, the Fed will say that tapering ideas will be put on hold and once again insist that inflation is only temporary. The Fed has painted itself into a corner. All it can do is keep the money spigots wide open. JM2C

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