Industry Expectations
Couldn’t be clearer – rates are going up. Be it major bank heads, “economists”, media outlets, the message is consistent. In fact Federal Reserve Vice Chairman Stanley Fischer said just this week market expectations for 2016 Fed rate increases are still “too low.” If forecasts from these “experts” come to fruition by year end, expect equity lines to be 1.5% higher and mortgage rates to be flirting with 5%.
Contrarian Possibilities
New highs, new lows, anything is possible. Despite rosy economic forecasts from Wall St. and the Fed for 2016, significant headwinds exist. Oil prices, geopolitical tensions, national security concerns, China’s suddenly faltering economy, non-existent wage growth, government regulations (and the resultant financial burdens), lackluster consumer spending, political gridlock, a Presidential election; the list of potential hurdles is extensive. Keep a close eye on US stocks, which have stumbled out of the gate so far in 2016. If the selling continues, or increases, rates will benefit. A 10+% decline in US stocks by year end would not be surprising.
Strategy
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