In the last issue of MFLoan Update I discussed how there was little consensus between economists about about the future of the economy and interest rates. Just a couple of days later I got my issue of Barron’s and it looks like they were thinking the same thing. The Current Yield column Yield Forecast: Further rise ahead in 2010 looked at a survey of 10 economists and asked them to predict the future of interest rates. A copy of the survey results are below;
Barrons seemed to conclude that this survey indicated an increase in rates, however I dont think that’s what the data shows. The survey asked the elvel of hte fed funds rate and 10-year treasury at the end of 2009 and a year from now. App the participants thought the Fed funds rate would remain the same for this year and only a fw thought it would increase next year. Given it’s almost at zero today no one could reasonably think it would go down. As for the 10 year treasury the results were a bit different. For the end of the year the range was from a low of 2.5% (29% above today’s rate) to a high of 4.25% (21% above today’s rate) and for a year from now the range being from 2.5% (29% below current rates) to 5.5% (57% above today’s rate). While the majority seemed to say rates are going to increase it was not a unanimous conclusion and the range of increase varied wildly.
Maybe the good news is no one predicted wildly higher rates which some in the press are mentioning. But since economists are not always the best at actually predicting the future then maybe maybe that is not good news.
