Beware of locking in ‘high’ interest rates
Posted by John Reed on
Today's WSJ says, "With interest rates likely to fall, now is the time to lock in rates above 5%."
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Ha!
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One of Reed's Rules of finance is that interest rates are totally unpredictable. I am the Reed referenced there.
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No one knows.
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If you lock in current yields, and market rates rise, you are screwed. If you do not lock them in, you can escape if rates rise. Or your rate will rise without your doing anything.
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The smartest bond guy in the universe is arguably Bill Gross formerly of PIMCO. He said of bond buying, a.k.a. locking in rates, "Beware of inflation."
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That is NOT BS.
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