Interest Rates Plunge on Draghi Comments

Wow—wow—the 10 year treasury is now trading at 2.03% after falling down to near 2% on comments out of the ECB that they may need more stimulus with interest rate cuts. That means more rates heading negative in the various European countries.

Then we have the Fed meeting today starting today (ending tomorrow) and the chatter for a rate cut here is growing. We don’t think that is likely to happen–just seems like there is no legitimate reason for it now — the market place is taking care of rate cuts. Plus we are “talking our book” because we like getting 2.35% on our money market funds.

We will be watching closely for economic weakness in all of the statistical releases.

25 thoughts on “Interest Rates Plunge on Draghi Comments”

  1. Northern Trust is projecting a 1% 10 year before it is all over (next 5 years or so). The gravity of demographics and a slowing economy are too much to escape. 75% or more of all global debt could produce a negative real yield!

      1. Tim – Doesn’t it bother you that no matter what direction the markets are going, either equity or bond markets, the guys with extreme views coinciding with the trending direction are always trotted out as “experts?” It’s always what gets print and there’s always a logic included that could make it possible for someone to eventually say “I told you so” if they turn out to be right or just fade into the woodwork if not. Just like the markets predicting 15 of the last 5 recessions……..

  2. Weak US data this week and now this out of EU. My screen is so bright green today I had to put on sunglasses. That’s the Modern Economic Theory working. Probably ends well too. Maybe not.

  3. I agree, Tim. I cannot find one ‘real’ reason to cut rates, yet, that’s so much of what the talking heads on the likes of CNBC keep yakking about. Autopilot seems to be working just fine and with a cut by the ECB, there will be even more money flowing into the US markets. It’s like damned if you have money in the US markets and damned if you don’t.

    Back to sobbing now that my CPE-A has been called…

    1. A4I, there can be many things that they aren’t saying publicly. For instance, negative real rates across the pond means the US doesn’t have to offer higher rates to attract capital. And the insanely large ledger of debt makes it cheaper for us. Given the anemic recovery for the past 10 years, they’re likely taking their chances and risking inflation at the expense of doubling the financing costs of the US debt.

      1. They should cut govt spending, not rates. I’ve worked more than my fair share all of my life to get to the point where I keep seeing my best investments (higher yielding ETD/pfd’s and such) called and replaced by much lower yielding cousins. But, this is the game so we either play or get played. Seems like it’s always the responsible savers/investors who get the shaft one way or the other while so many others just get their handouts and free, free, freebies.

            1. So…you can’t comment on the data, then. Too funny…

              Well, wouldn’t want to confuse you with facts, but it’s a bitch. You can trust me on that. lol

              1. Your left-wing article doesn’t compute. I’m not in the top 1% nor bottom 50% and these articles are a penny a dozen. Good luck to ya’…

                This is not the place for this discussion to devolve. We should keep it moving…

                1. Yeah, but…

                  Facts are not left-wing or right-wing. They’re just facts.

                  On the other hand, I didn’t make this statement:

                  “Seems like it’s always the responsible savers/investors who get the shaft one way or the other while so many others just get their handouts and free, free, freebies.”

                  You did. All I did was respond…

                  So, yes, peace. And as ol’ Roy used to say, “May the good Lord take a liking to you.”

                  1. I wonder what the age cutoff is to actually know Roy who…. Unfortunately, I and Pat Brady know.

                    1. Well, 2WR, easy for me since I’m ’bout old enough to be Gridbird’s father. Imagine that!

                      But Pat Brady, well, I ‘spect he ain’t known much for a while now…

                      “Happy Trails” and thanks for all you do here & elsewhere…

                2. A4I, Trust me here…I have been online friends with Camroc for several years now since we met way back when on SI. He doesnt lean left or right…His political leaning is…..curmudgeon. 🙂 Just teasing Dad! 🙂

                  1. I want to welcome Camroc into the curmudgeon club. It’s a high honor to be inducted by a whipper snapper such as Grid, as I should know. Congratulations Camroc!

                    1. P, the market is over for the day (I missed it golfing today) so I can get off track here now…We had 18 golfers in our group today and there are a bunch of my golfing buddies who proudly wear that badge too. We were at 2 tables figuring up the bets won and lost. I was at the money counting table. And the other table…I swear every other word from that table was either Obama or Trump, lol. Some of us from my table started listening and laughing… Probably be the exact same debate again Friday. Neither side unable to convert to the other…Im shocked! 🙂

                  2. Grid, one group gets the money, one group gets the hats. Thing is that both groups think they got a greatest tradeoff ever. Personally I never see things all one way, except curmudgeonly of course.

          1. “Economic justice”?

            Technology justice would be a more appropriate term as the rapid change in production and consumer demands have made certain qualities and abilities obsolete in time frames shorter than a career. Capital flows to the most efficient and capable uses and users.

            I prefer to look forward, not backwards.

        1. Man, I really don’t like to talk politics and especially here, but isn’t it Trump who is chirping the loudest about cutting rates? I mean word is he may try and get rid of Powell if he doesn’t do it.

          Not sure you are blaming the right people A4I.

    2. Sorry for your loss, A4I….. are you seeing any quotes on CPE-A this morning? I don’t see anything at TDA or Fidelity… As mentioned before, I’ll buy as a cash stasher at the right price…kinda hard to calculate despite knowing the divvy at call because you don’t start earning accrued until July 1.

      1. One small sale pre-market but nothing since then. They have stated a $50 redemption price plus .24c for the dividend accrued.

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