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Realistbear

Senior Forex Strategists Says 5.5% I R Possible

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http://www.dailyfx.com/story/dailyfx_repor...keyword=article

The source of this sudden dollar strength was William Poole the President of the St. Louis Fed who noted that the Fed was prepared to become even more aggressive in its rate hike campaign if future US eco data proved robust To that end whispers about the upcoming NFP report began circulating on the dealing desks with some analysts now looking for 300K versus consensus figures of 200K. If the employment report does prove to be that strong,
the currency market will begin to factor in the possibility of 5.25% or even 5.5% fed funds rates
which should attract additional carry trade capital to the dollar and is likely to result in the greenback retesting its 2005 highs.

With sterling currently frozen at 4.5% like a deer caught in the headlights the prospect of a 1% differential with US rates does not bode well for sterling strength when factoring in growing weaknesses in the economy and the pending HPC.

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I have so little faith in the banking system that I think that all bets are off in regards to rates.

What chance that banks can make more money by lending ever larger amounts of money at ever lower ineterest rates - almost nil, at some point huge defaults / total marginality of all the trades would blow back in their faces.

What chance that banks can make ever more money by turning up the heat on payment rates/interest rates, squeezing every last penny of profits out of those that do default, wchilst trying to keep defaulter levels as low as possible - every chance.

I think the banks have enough debt on hand to make money for decades, if they can push rates up.

Is there a government out there in the world who's first resort is to not upset the banking applecart and protect banks first above all others?

Edited by OnlyMe

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Out of interest, what is the long-term average of US interest rates? I mean, what were they averaging between the mid-70s and up until the mid-90s?

Mid 70's 5%-7% ish rose as high as 20% early 80's - dec '94 5.5%. Average over the 20 yrs was around 8%.

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Mid 70's 5%-7% ish rose as high as 20% early 80's - dec '94 5.5%. Average over the 20 yrs was around 8%.

Just below long term average would do nicely for us all? Say 7%. How about starting around Autumn as we go into a long, cold, dark Winter for the housing market?

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Thanks, so quite a few percentage point jumps to get back to the long-term average - effectively a doubling from the current level.

With so much consumer debt in the US the fall-out would be a disaster as it would be for the UK, the EU and just about anywhere. But 5.5 or 6% would be bad enough.

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Just think, at those levels the UK economy would collapse - mass repossessions and a collapse in the property market - major recession - maybe even a slump.

The dipstick in number 11 has a lot to answer for. I have never understood why the borrowing binge has not been frowned upon more strongly in the financial media.

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I'm not sure how much the long term average is relevant here. You have to bear in mind that that average includes the tight policies of the early 80's where Monetarism was the darling of the Reagan and Thatcher governments. Money supply and not CPI were the main concern then.

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I'm not sure how much the long term average is relevant here. You have to bear in mind that that average includes the tight policies of the early 80's where Monetarism was the darling of the Reagan and Thatcher governments. Money supply and not CPI were the main concern then.

Does that mean it is different this time?

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Does that mean it is different this time?

Perhaps a new era starting now with the Bernanke tenure and a possible end to the ultra accomodative rates in Japan. I personally think we could do with a good dose of monetarism.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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