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Running Bear

Feds To Keep Going

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This article in USA today claims the Fed will continue the rises,

Link - USA today

"The market is getting lulled into sleep here," says Harris, who has added two interest rate increases to his forecast in recent months. "In reality we think that both the inflation numbers and the growth numbers will keep the pressure on the Fed."

Says added two more - so that is at least 5% then.

But Lehman's Harris, along with economists from The Bank of Tokyo-Mitsubishi UFJ and Decision Economics, expect the Fed will raise rates three more times this year in addition to an increase Tuesday. They expect the Fed's target will be 5.5% at the end of 2006.

And whats this, the japanese and this tin foil hat fella think 5.5% by the end of 2006,

I realise this may all be crap, but is nice to see a break in the ranks.

Instead of all this constant VI clamour for a rate cut, slowly but surely the leading economists over here are breaking ranks and admitting that the rates HAVE to rise. A bit like we are seeing on this site at the moment with the old school bears taking off their bear suits.

I think we will see the fed at 6.5% by mid 2007 IMHO.

I may be wearing a tinfoil hat whilst writing this, but I think we are in for a slow decline. There are too many construction projects in N America in the pipeline that simply cannot be turned on and off like a light switch.

I believe that from now to 2010 as many of the projects wind down, we will see a gradual reduction in construction sector related jobs, combined with a gradual slip into a slight recession and the resultant reduction in consumer spending (that we are already starting to see).

IMHO, interest rates and unemployment will ratchet up slowly from now to 2010, with a corresponding slow decline in asset and commodity prices. I think this process in the absence of a decent trigger will reslut in a frustrating slow process that will frustrate bulls and bears alike.

Of course, it all really comes down to what the bond market makes of all this, I am interested to heard what you more economic minded people make of this?

Will the bond market increase the spread between lond and short interest rates if the Fed increases continue?

I understand most of the economics discussed on here, but put more faith in first hand information - namely the timescale of major civil projects, housing starts and job market etc.

Edit - messed up the link

Edited by Running Bear

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  • 335 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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