Ken McElroy Show
Interest Rates Just Made a Move What to Expect for 2025
Feb 21, 2025
George Gammon, an expert in treasury markets, interest rates, and inflation, joins the discussion to unravel the latest shifts in the financial landscape. He delves into historical rate-cutting cycles, forecasting the economic scene for 2025. Topics like the impact of global capital flows on real estate and the relationship between rising interest rates and inflation take center stage. Gammon also shares insights on the intriguing dynamics of the 10-year Treasury yield and how it could affect both consumer prices and real estate strategies moving forward.
56:36
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Quick takeaways
- The treasury market's fluctuations indicate that even with Fed rate cuts, long-term interest rates may remain high if growth expectations persist.
- Historical rate-cutting cycles reveal that inflation expectations can alter treasury yields unexpectedly even during recession-like environments.
Deep dives
Treasury Market Dynamics
The current state of the treasury market reveals a significant fluctuation in interest rates, particularly the 10-year treasury yield in relation to Fed funds rates, which have been decreasing. Historically, during rate-cutting cycles such as those seen in 2007-2008, the 10-year treasury yield actually increased, reflecting rising inflation expectations. This historical context suggests that even if we see a recession-like environment again, such as in 2008, the dynamics of the treasury market could shift in unexpected ways. Understanding these patterns can help market participants anticipate the potential trajectory of interest rates and economic conditions moving forward.
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