Personal Wealth Management / Expert Commentary

Do Interest Rate Outlooks Matter? Ken Fisher Answers

With interest rates—both long- and short-term—at low levels relative to history, many investors want to know where interest rates are headed from here.

Because of the central banks’ influences over interest rates, Ken Fisher believes it has become increasingly difficult to predict where interest rates will go moving forward.




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Ken Fisher: When people ask me where do I think interest rates are going, I’m often prone to answer with a question, which is why do you think my opinion even possibly matters. There are so many people so interested in interest rates short term and long term that any view that I have is largely superfluous now.

Ken Fisher: You know that short long-term interest rates are low. Historically you know that short-term rates are controlled by central banks and our country by the US federal reserve, and overseas outside America by central banks there. Wherever long-term rates used to not be impacted at all by central banks they were free markets set since the beginning of quantitative easing programs.

Ken Fisher: Central banks have tried to impact long rates to push them down. The reality of all of this is that it’s all somewhat artificial and will remain artificial for some good period of time, because the central banks are, in my opinion, more reactors than they are causers. They react all the same stuff that all the rest of us do. That is they’re all very concerned about things like the Coronavirus and elections, they don’t say they’re concerned about elections but they are, and concerned about things like whatever congress may or may not do and what have you.

Ken Fisher: So I can’t tell you what will happen next month or next quarter necessarily even next year. I will tell you that in the short term, there’s a not a lot of reason for long rates to go up. The central banks continue to push to try to keep them down. They believe that’s good, I believe that’s stupid. But I’ve never really believed central banks were very capable in the first place. The fact is that long rates are a little higher now than they were at their low point in the summer for this year, but still well below where they started the year at, and as we look into the future, eventually we can say but we don’t know what eventually is that long rates will be much higher and there will be a spread between short-term and long-term interest rates eventually.

Ken Fisher: Which will at least fully compensate for whatever future world of inflation we have, that is if this is short-term rates and this is long-term rates. Times goes by longer term longer rates go up higher and higher that spread ought to fully compensate for whatever inflation foes on to compensate lenders for the inflation that they suffer during the time period in which they lent their money out.

Ken Fisher: That hasn’t really been true recently and that will return eventually. Eventually you should look for long rates to go up from here, fairly markedly at least several percent, but there’s no pressure in the short term to do that that anyone can see and I wouldn’t expect at any time any too soon. What will they be in December 31st or what they’ll be on March 31st. I don’t have a clue so if I were you I wouldn’t worry about that too much because so many other people are worrying about it they’re kind of doing it for you. And just assume that this is not a world where short all or long rates move a lot and accept it for what it is and move on.

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“Investing in Securities involves a risk of loss. Past performance is never a guarantee of future returns. Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations. The foregoing constitutes the general views of Fisher Investments and should not be regarded as personalized investment advice or a reflection of the performance of Fisher Investments or its clients. Nothing herein is intended to be a recommendation or a forecast of market conditions. Rather it is intended to illustrate a point. Current and future markets may differ significantly from those illustrated here. Not all past forecasts were, nor future forecasts may be, as accurate as those predicted herein.”


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