Interest Rates Are Low Until They're Not

May 4, 2022

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Pssst...They are still low...

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"Interest rates are low until they're not..." Old Wall Street Proverb

The Federal Open Market Committee today raised interest rates an unexpected 50 bp to a 1% Fed funds rate, or short term rate. Stocks rallied on the news that the Fed made a strong first move to combat the coming Biden hyperinflation.

What investors, and the American public need to understand, is that the historical average of the U.S. 10 year bond is approximately 5%. Right now the 10 year is trading a 2.946%. The point being, the 10 year bond is still well below its historical average.

However, interest rates have been rising steadily, but we are no where near the peak. In fact, we are just getting started.

It is no secret that OBiden is purposefully destroying the American economy that Trump built. (Yes, Barack, he did build that)

Expect a large part of your future income to be taken up by debt service cost. In other words, refinance or pay down debt.

MBA Mortgage Applications (Apr 29) printed at 2.5%.

ADP Employment Change (Apr) 247k vs 395k consensus estimate.

Goods and Services Trade Balance (Mar) printed at -$109.8B vs -$107B estimate.

Goods Trade Balance (Mar) printed at -$128.1B.

S&P Global Composite PMI (Apr) printed at 56 vs 55.1 estimate.

S&P Global Services PMI (Apr) printed 55.6 vs 54.7 estimate.

ISM Services Employment Index (Apr) printed at 49.5 vs 51.2 estimate.

ISM Services New Orders Index (Apr) printed at 54.6 vs 64.3 estimate.

ISM Services PMI (Apr) printed at 57.1 vs 58.5 estimate.

ISM Services Prices Paid (Apr) printed at 84.6 vs 84.1 estimate.

EIA Crude Oil Stocks Chang (Apr 29) printed at 1.302M vs -1.167M estimate.

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Author

L Todd Wood

L Todd Wood, a graduate of the U.S. Air Force Academy, flew special operations helicopters supporting SEAL Team 6, Delta Force and others. After leaving the military, he pursued his other passion, finance, spending 18 years on Wall Street trading emerging market debt, and later, writing. The first of his many thrillers is "Currency." Todd has been a national security columnist for The Washington Times and contributed to One American News, Fox Business, Newsmax TV, Moscow Times, Novaya Vremya (Ukraine), the New York Post, National Review, the Jerusalem Post, Zero Hedge and others. He is also founder/publisher of CDM. For more information about L. Todd Wood, visit LToddWood.com.