What if…..

[jonah35]

bond markets seem to be pricing in rates going higher but then pivoting early next year as the economy slows but….

What if Russia turns down gas supply later this year (no point them doing it in summer) and gas prices increase again and there is an escalation of conflict with Taiwan and China which again pushes up oil prices etc.

Also during this time there are strikes and wage rises which become embedded so inflation becomes baked in and starts to rise a little rather than fall. It has, after all, been rising more than any political figure / b of e member has forecast for months on end and even they’re now saying 13% by year end so it could easily be 15/16%.

If this is the case isn’t it likely that interest rates may have to go up quite a lot more than forecast to something more like 5/6% or more…

To me, the above doesn’t seem all that implausible but the markets seem to think that rates will be going lower early next year (but yet we are at emergency historically low levels as it is)

So why are the markets (which are smarter than me) think rates will come back down and the asset bubble will continue forevermore

[anonymous-user]

I suppose it is because the markets price in not what should be done but what they believe shall be done.

Edited by anonymous-user on Sunday 7th August 20:46

[Ashfordian]

jonah35 said:

So why are the markets (which are smarter than me) think rates will come back down and the asset bubble will continue forevermore

Probably based on recent experience.

I suspect if things do start to get a lot worse politically we'll end up with rates being dropped and the printing presses started up again. The markets know that if what you say happens there is this safety net.