Safety is the key as interest rates continue to fall
4 years, 6 months ago

Safety is the key as interest rates continue to fall

Live Mint  

Yields enjoyed by fixed income securities’ investors are headed lower. Vanilla economic theory suggests that lower interest rates spur growth as producers get funds at lower cost, which aids the production of cheaper goods. Falling interest rates simply means that the segment of the population dependent on passive, fixed income—often senior citizens, will fall short of their required returns. At lower rates of returns, they are likely to turn away from investments that are yielding falling returns and move towards high yielding avenues. People in the 25-45 year age group can absorb risks, but older people should choose to invest money only in government-guaranteed schemes and bonds though they offer lower rates of returns, but will never default on commitments.

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History of this topic

Pre-pandemic ultra-low rates may not return; how to invest in an elevated rate regime? Here’s what experts say
6 months, 3 weeks ago

Pre-pandemic ultra-low rates may not return; how to invest in an elevated rate regime? Here’s what experts say

Live Mint  

US Fed Chair Jerome Powell reiterated on Wednesday, June 12, that the central bank would need more confidence that inflation has come down sustainably. Consequently, it is reasonable to expect that monetary policy and overall interest rates will stay higher for an extended period," Sujan Hajra, Chief Economist & Executive Director, Anand Rathi Shares and Stock Brokers, pointed out. Factors …

Bailey says ‘too early’ to think about rate cuts in rift with Bank’s chief economist
1 year, 2 months ago

Bailey says ‘too early’ to think about rate cuts in rift with Bank’s chief economist

The Telegraph  

He said: “It is really about ageing populations, the fact that we all tend to save more as we get older, the interest rate is the price of money so it is balancing savings and investment, and in an older population there tends to be a larger amount of saving compared to the demand for investment. “That tends to suggest …

How ‘POT’ threatens to play a major role in coming elections
1 year, 2 months ago

How ‘POT’ threatens to play a major role in coming elections

New Indian Express  

None batted an eye when the RBI’s data on the net financial savings of households suggested that it dropped to a two-decade low of 5.1% of GDP in 2022–23. There is no distress, it said, claiming that households have been taking advantage of low interest rates to invest in physical assets, such as real estate, passenger cars, and gold. Even …

Rising long-term interest rates are posing the latest threat to a US economic ‘soft landing’
1 year, 3 months ago

Rising long-term interest rates are posing the latest threat to a US economic ‘soft landing’

Associated Press  

WASHINGTON — Surging interest rates are intensifying the challenges for the U.S. economy and threatening to derail the Federal Reserve’s drive to tame inflation without causing a deep recession. The jump in longer-term rates coincides with other threats, from higher gas prices and this week’s resumption of student loan payments to autoworkers’ ongoing strike and the risk of a government …

As fixed mortgages end and rates rise, many risk losing their homes
2 years, 6 months ago

As fixed mortgages end and rates rise, many risk losing their homes

ABC  

Sarah Ibrahim is worried about what will happen when her fixed rate ends in January. As interest rates rise, almost 300,000 people who took large and risky home loans during the pandemic could fall into severe financial hardship or even default. "We're already seeing banks ramping up their action to enforce mortgage debts and repossess homes already against the background …

Rising interest rates in US will hinder foreign economies
2 years, 8 months ago

Rising interest rates in US will hinder foreign economies

Associated Press  

WASHINGTON — When the Federal Reserve raises interest rates — as it did Wednesday — the impact doesn’t stop with U.S. homebuyers paying more for mortgages or Main Street business owners facing costlier bank loans. “It will put pressure on all types of developing countries,’’ said Eric LeCompte, executive director of the Jubilee USA Network, a coalition of groups seeking …

Persistent pandemic will delay economic recovery: Dutch Central Bank
3 years, 9 months ago

Persistent pandemic will delay economic recovery: Dutch Central Bank

NL Times  

The economy will recover more slowly than Dutch central bank DNB expected due to an extended and stricter lockdown. “Despite all good intentions, the Netherlands is not the best student in the European class when it comes to sustainability lessons.” Low-interest rates impact general public Another prediction that the DNB has for the future is that interest rates on savings …

Why the Reserve Bank and the federal government don't see eye to eye on Australia's coronavirus recovery
3 years, 9 months ago

Why the Reserve Bank and the federal government don't see eye to eye on Australia's coronavirus recovery

ABC  

These are unusual times. As the federal government is adamant that stimulus needs to be wound back, to allow the private sector to take over in the recovery, the Reserve Bank is doubling down, arguing that it will be years before Australia can wean itself off the emergency interest rates that have sunk to zero. Responsible lending not responsible Ever …

EXPLAINER: Why rising rates are unsettling Wall Street
3 years, 10 months ago

EXPLAINER: Why rising rates are unsettling Wall Street

Associated Press  

NEW YORK — Yes, it’s possible to have too much of a good thing, and that’s exactly why stock markets around the world are getting so unsettled. But expectations for stronger growth — plus the higher inflation that could accompany it — are pushing interest rates higher, which is forcing investors to re-examine how they value stocks, bonds and every …

Savers aren’t getting bailed out by the Fed
4 years, 8 months ago

Savers aren’t getting bailed out by the Fed

CNN  

New York CNN Business — The Federal Reserve has thrown one lifeline after another to businesses, cities, states and consumers to try and keep the economy afloat in the midst of the Covid-19 pandemic. Low rates punish people, particularly older and more conservative investors, who are stashing money in bank accounts, money market funds or Treasury bonds. High yield bonds …

Coronavirus expected to push mortgage rates slightly higher
4 years, 9 months ago

Coronavirus expected to push mortgage rates slightly higher

NL Times  

For the first time in a long time, the mortgage interest rates in the Netherlands are expected to rise instead of fall - due to the economic uncertainty the coronavirus is causing, according to ABN Amro. The bank previously forecast that interest rates would fall further, even though the mortgage interest rate was already historically low. Central banks are willing …

Coronavirus: Why has the interest rate on UK debt fallen to record lows?
4 years, 10 months ago

Coronavirus: Why has the interest rate on UK debt fallen to record lows?

The Independent  

For free real time breaking news alerts sent straight to your inbox sign up to our breaking news emails Sign up to our free breaking news emails Sign up to our free breaking news emails SIGN UP I would like to be emailed about offers, events and updates from The Independent. Read our privacy policy The interest rate on traded …

Coronavirus roils markets: this is why it matters to everyone
4 years, 10 months ago

Coronavirus roils markets: this is why it matters to everyone

Al Jazeera  

Even if you are not invested in stocks and bonds, how these markets behave shows what is at stake in the global economy. The 10-year US treasury yield – which on Friday tumbled below 0.7 percent for the first time ever – is a benchmark for setting rates on financial products such as home mortgages and student loans. The “R” …

RBA interest rate cuts won't save the economy from coronavirus, but there are policies that may
4 years, 10 months ago

RBA interest rate cuts won't save the economy from coronavirus, but there are policies that may

ABC  

An interest rate cut might be a bonus for homeowners with mortgages and give share investors a temporary sugar hit, but it's not going to do much to save the economy from coronavirus. Rate cuts can't stop coronavirus disruptions If a rate cut won't do much to help with the demand shock, it'll do virtually nothing to ameliorate the supply …

The 10-year Treasury yield just dropped below 1% for the first time in history
4 years, 10 months ago

The 10-year Treasury yield just dropped below 1% for the first time in history

CNN  

New York CNN Business — The 10-year Treasury bond yield dropped below 1% for the first time in history on Tuesday, as investors grew increasingly worried about the novel coronavirus outbreak. Lower interest rates Treasuries also express investors’ interest rate expectations. So if the 10-year Treasury yield falls, the market tends to expect lower rates in the future. The amount …

Mortgage Rates Are Near All-Time Lows As Coronavirus Worries Hit Markets
4 years, 10 months ago

Mortgage Rates Are Near All-Time Lows As Coronavirus Worries Hit Markets

NPR  

Mortgage Rates Are Near All-Time Lows As Coronavirus Worries Hit Markets Enlarge this image toggle caption Steve Dipaola/Reuters Steve Dipaola/Reuters A dramatic drop in mortgage rates may give prospective homebuyers a chance to afford the house they've been eyeing — or may lower monthly payments for homeowners who refinance. But there's a silver lining in this market mayhem for homeowners …

Reserve Bank leaves interest rates on hold despite bushfires and coronavirus
4 years, 11 months ago

Reserve Bank leaves interest rates on hold despite bushfires and coronavirus

ABC  

The Reserve Bank has left interest rates on hold at its first meeting of the year, despite the economic fallout from Australia's bushfires and China's coronavirus outbreak. Key points: The Reserve Bank has kept the cash rate unchanged at 0.75pc since its last cut in October RBA governor Philip Lowe says the bank will be focusing on jobs figures to …

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