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Fed Rate Hike & Borrowing Costs

MsMorrisineMsMorrisine Posts: 32,136 ✭✭✭✭✭
edited April 7, 2017 1:24PM in Precious Metals

I haven't been reading the PM forum but noticed there are a LOT of new replies to read in the discussion regarding the rate hike vs. gub'mint borrowing costs.

I didn't want this to get buried in there.

Fed Rate Hike of overnight rates on March 15
7 year Note auction on March 31st.

Here is a 30 year chart.

Current maintainer of Stone's Master List of Favorite Websites // My BST transactions

Comments

  • cohodkcohodk Posts: 18,554 ✭✭✭✭✭

    Looks like it really boosted borrowing costs. Lol

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • MsMorrisineMsMorrisine Posts: 32,136 ✭✭✭✭✭

    Today's results:

    Car loans:

    BankRate.com

    Current maintainer of Stone's Master List of Favorite Websites // My BST transactions
  • MsMorrisineMsMorrisine Posts: 32,136 ✭✭✭✭✭

    the Fed doesn't go to the bank for a loan

    we'll pay more, but the Fed Sells into a different market.

    Current maintainer of Stone's Master List of Favorite Websites // My BST transactions
  • MsMorrisineMsMorrisine Posts: 32,136 ✭✭✭✭✭
    edited April 12, 2017 12:55PM

    perhaps we should say the Fed hurts main street and the public when they raise rates... ;)

    Current maintainer of Stone's Master List of Favorite Websites // My BST transactions
  • CoinstartledCoinstartled Posts: 10,135 ✭✭✭✭✭
    edited April 12, 2017 1:39PM

    @cohodk said:
    Looks like it really boosted borrowing costs. Lol

    Do your expect instantaneous reaction? Monetary policy is not the same as getting a nibble on your Popeil pocket fisherman.

  • cohodkcohodk Posts: 18,554 ✭✭✭✭✭

    @MsMorrisine said:
    perhaps we should say the Fed hurts main street and the public when they raise rates... ;)

    History has proven that economies do not like extremely low rates, just as they don't like extremely high rates. Rates are still very, very low.

    Is not main street comprised of savers who are getting nothing on their savings? Those people are afraid to spend for fear they will run out of money. Ultra low rates are a disaster.

    Excuses are tools of the ignorant

    Knowledge is the enemy of fear

  • MsMorrisineMsMorrisine Posts: 32,136 ✭✭✭✭✭

    30 year mortgage rates

    BankRate.com again

    Current maintainer of Stone's Master List of Favorite Websites // My BST transactions
  • MsMorrisineMsMorrisine Posts: 32,136 ✭✭✭✭✭
    edited April 12, 2017 3:44PM

    @Coinstartled said:

    @cohodk said:
    Looks like it really boosted borrowing costs. Lol

    Do your expect instantaneous reaction? Monetary policy is not the same as getting a nibble on your Popeil pocket fisherman.

    you are thinking I still don't get it and I'm thinking you still do not get it.

    First, it had a pretty good and quick reaction in car loan rates.

    When the economy is hauling it and inflation is looming, the long end of the curve is way up. That is what boosts the gub'mint's borrowing cost.

    The dynamics of a rate hike is to slow the economic growth rate. In a way, should they have an effect on the economic growth rate, the rate hikes would actually lower the borrowing costs in an environment where growth is hauling it up.

    anyway, there is a huge difference between "overnight" rates banks charge each other and 30 year interest rates that are obtained from a market that has a wide variety of players besides banks.

    in short, as shown in the car loan graph, car rates have gone up in a short period of time. Not thoroughly surprising. The mortgage rates and the 30 year did not. I won't parse words over "just added $50bil" and I will go into the graphs from the other thread. After their last rate hike in 2006(?) the market and economy tanked. Again, the lowering of rates was an effort the speed up the economy, which would lead to higher rates... but it did not work. So, in the long-term their hikes did nothing and in the relative long-term their lowering did nothing. Why? The economy sets those Treasury rates, not the Fed. The Fed's rate moves try to have an opposite effect on the economy and indirectly on the direction of Treasury rates.

    Current maintainer of Stone's Master List of Favorite Websites // My BST transactions
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