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A Man of Wealth and Taste
Join Date: Dec 2002
Location: Out there somewhere beyond the doors of perception
Posts: 51,063
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People are willing to take low long term interest rates because they are decidedly pessimistic about long term economic performance. If there were more confidence rates would be higher as higher rates would have to be paid to attract money away from alternative investments.
The FED short term rate is the overnight lending rate to banks...and is set by the FED..to speed up or slow the flow of money.
The fact that there is an inversion belies the fact that the herd is more pessimistic economically and the FED is out of touch with that sentiment. The pressure is on the FED to lower rates to get in synch with global sentiment..
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