The Dicey Part of the Year…

As we outlined in our annual forecast a few weeks ago, the first quarter of the year, maybe even the first half, will be difficult to negotiate. Growth will be stronger than most market participants expect. Market interest rates, (the 30Y+10Y+5Y+2Y) average we always cite, will be locked in the low 4.0’s as GDP growth will be too strong to allow much lower rates, maybe a brief touch of 3.5 % (4.23 % today) as the FED tries to get the Fed Funds 3 month rate inline with market rates with a total cut of 1.0 to 1.5 % in the last half of the year.

The election will play a part in the post August period as it becomes apparent that a Trump win is off the table forever. Biden will then assert an even more aggressive pattern for his second term as he goes beyond saving the country from Trump and implementing his vision by bringing younger people into the administration to make it happen.