Paul Farrell tells readers that they should pay attention to history in the wake of interest interest rates.
After bad-mouthing the Fed chairman, saying, "Tapering's just an excuse for doing nothing…till Summers (or Yellen) take care of the real world," Farrell looked at the history of bond market movements between 1989 and 2013.
Surprise, surprise, when Fed rates went down, bonds were up and when Fed rates were up, bonds were down.
For 2013 to 2015, Farrell predicts the Fed rate would still be at zero, but borrowing rates would be up and bonds would be in the process of dropping, writing, "More recently, however, since late 2012, bond returns have dropped more than 6 percent, to a negative 3 percent, although the Fed rate remain unchanged, near zero, thanks to Bernanke's run-out-the-clock tapering talk."
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