Contrary to Popular Belief: The United States has Really High Interest Rates

Everyone has heard how incredibly low the United States’ interest rates are. The pressing question now is when will the Fed commence ‘Lift Off’? At what increments will rates rise once they begin the program? We have been hearing for a long time that rates have nowhere to go but up. Maybe that is not the case. Comparing America’s current interest rates to historical averages, they are indeed very low. However, if we compare our current 1, 5, and 10 year rates against developed economies around the world today, we can see that they are actually sky high. In numerous countries; Switzerland, Sweden, and Denmark, the rates are negative. This has a very big impact on our domestic economy. We are seeing foreign investors putting money into the US because they get a significantly higher yield than if they invest in Germany. We have a feeling the Fed’s decision on interest rates may not be based solely on domestic economic indicators. With recent GDP and wage numbers continuing their less than impressive streak, the odds of a summer rate hike are getting smaller and smaller.

Maturities

May 4, 2015