St. Louis Federal Reserve Bank President James Bullard said Friday that the Fed will need to raise interest rates by the end of the first quarter of 2015. However, Pimco’s Tony Crescenzi doesn’t see that happening so soon.Here is a direct video link.
Key factors pressuring rates lower today remain an aging population and the gifts of 30 years of reckless credit policies from global bankers and governments that resulted in stagnant wage growth courtesy of globalization and excess capacity leading to an indebted, under-saved, aging western populace along with an under-employed and already indebted youth.
Our own work suggests that bond yields may well be rolling over again as shown below in the chart of the US 10-year Treasury. 2.50 is the next key test level and if that support fails, then the 2% range is back in view. This will mean that under-capitalization rates in savings and pension plans will continue to grow and in turn, continue to suppress spending in the future. The credit bubble is the gift that keeps taking future demand.
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