📉The drain of the reverse repo facility will result in higher short-term interest rates.
🌍The global sovereign debt crisis and the US government's deficits will push long-term interest rates higher.
💼Tightening lending standards and increasing bankruptcies are contributing to higher interest rates.
💸The forced sale of debt by China and the inflation expectations from de-globalization are pushing interest rates up.
🏠The crowding-out effect is causing mortgage rates to increase.
Why are interest rates expected to rise in 2024?
—Interest rates are expected to rise due to multiple factors, such as the drain of the reverse repo facility, the global sovereign debt crisis, tightening lending standards, increasing bankruptcies, the forced sale of debt by China, inflation expectations from de-globalization, and the crowding-out effect.
How will the drain of the reverse repo facility affect interest rates?
—The drain of the reverse repo facility will result in higher short-term interest rates as the US government will no longer have a trillion dollar slush fund to borrow from, leading to the need for higher rates to incentivize lending.
What impact do the US government's deficits have on interest rates?
—The US government's massive deficits push interest rates higher as they increase the demand for government borrowing, leading to higher interest rates to attract lenders.
Why are tightening lending standards and increasing bankruptcies contributing to higher interest rates?
—Tightening lending standards and increasing bankruptcies indicate higher risks for lenders, which results in the need for higher interest rates to compensate for the increased risk.
How does the forced sale of debt by China affect interest rates?
—The forced sale of debt by China puts selling pressure on bond prices, pushing interest rates higher. This is because the relationship between bond prices and interest rates is inversely correlated.
00:00Interest rates are currently high and are expected to rise in 2024.
02:43The drain of the reverse repo facility will result in higher short-term interest rates.
08:01The global sovereign debt crisis and the US government's deficits will push long-term interest rates higher.
08:41Tightening lending standards and increasing bankruptcies are contributing to higher interest rates.
09:59The forced sale of debt by China and inflation expectations are pushing interest rates up.
11:38The crowding-out effect is causing mortgage rates to increase.
