About Me

Retired chief investment officer and former NYSE firm partner with 40 years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Monday, October 29, 2012

A Note On Short Term Interest Rates

The Fed's zero short term interest rate policy has, save for the Libor scandal, put the
usually hot topic of whither short rates on ice for markets players here. The US has
experienced over three years of economic recovery and it is interesting that the
indicators I track to determine whether the Fed might change the Fed Funds rate (FFR%)
 have never aligned 100% to support a rise in the FFR%. In fact, recently the positive
momentum of each of the indicators have turned to mostly flat, suggesting no cyclical
case for raising rates.

My super long term 91 day T-bill model points to a reduction of rates currently, but,
the model also suggests ongoing rate suppression as it suggests the "Bill" should be
yielding 2.4%. Savers are being punished but with positive offsets in retirement and 401k
accounts and a nascent recovery of home prices. It has been a long slog.
Threat of local power outage from the giant Hurricane Sandy storm remains.

1 comment:

sheila olson said...

Truly said due to the increase in the rate of interest and increase in the demand of capital market people use to take short term loans to run their business. There are banks like Acumen Finance who are offering money within 48 hrs from their in-house source, that means they are lending money from their very own lending pool.
bridging finance | caveat loans | short term finance