On bond rates you said: If the 10-year rate hits 2% – be very, very careful. What do I need to be careful about?
Interest rates 1: The government inflation target is supposedly 2%. Note that this 2% target is really much lower than the ‘real‘ rate since the ‘basket of goods and services’ they use to arrive at their 2%, is not complete. It does not include a whole bale of stuff (rents, little real estate, oil etc., etc.). If the official rate goes over 2%, the 10-year rate will go much higher in ANTICIPATION. Bond holders will at least want their money back (As of this April bond holders from last summers are in serious loss territory already). If it goes higher and fast — HIGHER INTEREST RATES WILL RESULT…no matter what the Fed or anyone else says. Bonds can be issued but they must be bought…In a ‘high inflation world’ bond buyers will stop buying until rates are (much) higher. That is where that comment comes from. Oh, and long-term mortgage rates are tied to the bond market, not the prime rate.
Ok Interest rates 2: Just looking at today’s outcome: We will have Monetary hyper inflation or rates must rise! You tell me what we have now when House prices are up 39%!