Quote:
Originally Posted by swarmee
I'm not keen on all the short and long talk (I only invest in stock/bond funds), but I did find it interesting that the bond rates inverted recently. That's a common indicator of weakness in the market and usually a precursor to a recession.
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The rate structure is so complicated right now.
The rest of the world has much lower rates dragging ours lower. In many cases negative. That said the rates in the US will be low forever at this point because the debt is so large the interest expense can't be handled.
The budget deficit has risen for various reasons but the largest is interest expense. People are just not using common sense. When you have 23 trillion of debt and you constantly go to the markets for cash you are at the mercy of the current coupon rate. Our budget is around 4.3 trillion and a two point increase that lasts for five years will add well over 120 billion of interest and it just goes up over time as more debt is issued.
Low rates are here to stay.