Interest Rate Futures have just begun to turn negative, implying the chance of another market drop happening throughout 2022 – here are my thoughts, what this means, and the chances of this happening – Enjoy! Add me on Instagram: GPStephan
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Welcome To: The Federal Fund Rate Futures.
This is the future price that represents the interest rates that banks pay when they lend money to each other, and this price will fluctuate over time, and then “Settle” on the last day of each month, essentially locking in that contract price for those specific dates.
But beginning in September of 2022, some contracts have begun to price in a NEGATIVE FEDERAL FUNDS RATE…meaning, they’re betting on a scenario where contracts are trading for OVER $100….at which point, you’re basically just saying: I’m willing to lose money…just for the guarantee that I’ll have a safe place to park my cash….
Since the beginning of the year, The Federal Reserve has been facing an uphill battle of inflation – while supply chain issues, low interest rates, and stimulus packages have caused the price of everyday items to rise at their fastest level in 30 years.
For some people, that’s great – it means that inflation causes certain assets, like stocks, commodities, and real estate, to rise in value…so, if inflation goes up 3% in a year, so does your investment. Other people say moderate inflation is necessary to keep our economy going, because – if we KNOW our money is going to lose a little value every year – it encourages us to either spend or invest it back into our economy, which keeps us growing.
The PROBLEM, however, is when inflation begins to eat away at the purchasing power of your money, FASTER than you’re able to make it…and, right now…WAGES simply can’t rise fast enough….leading us the new revelation: INFLATION MIGHT NOT BE TRANSITIONARY.
In terms of future rates, one asset manager believes that we could very likely see low – or negative interest rates…forever, based on HISTORY. His research dives into what known as “Secular Stagnation,” which has identified a downward trend in interest rates dating back over 700 years…predicting that “real rates could soon enter permanently negative territory.”
Either way, we could have a situation where – BOTH are right: We could see short term overnight federal funds rates getting pushed negative if the economic outlook starts getting worse….while, long term, interest rates expect to rise to help offset inflation.
BUT…that doesn’t mean that rates will actually end up going negative, and only time will tell how this pans out. Most likely, this is simply due to a fear of the new illness potentially wrecking havoc on the economy…and, the markets are looking for any excuse to spark a sell off.
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I can’t stop thinking about the irony and insanity of Elon Musk becoming the richest person in the world why they individual who has spent $20billon
Negative interest rates would be like throwing a brick on the gas pedal of inflation.
Watching this video actually gave me deja vu for some reason.
🙂
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Learned a lot from your videos Graham, thank you!
Depressing
"Whats up Graham, it's Guys here"
"and this price will fucktuate over time…" 2:30
The "Fed" raising interest rates and mortgage rates rising . That's a big laugh. They won't because they can't.
They have to keep this dog and pony show going for as long as they can.
The dollar is on it's way to being worthless.
4:38 You don't have to worry about about the government defaulting on your investment? Tell that to Mitch McConnell and company…
"What's up Graham, it's Guys here" ???
negative interest rates in light of non-transitionary inflation ….i think not….
Transitory Graham , not transitionary,
Transitory
👍🏽
The official inflation #'s have been cherry picked BS for decades. When you can pick and choose what numbers you use, you can get any result you want. What's happening now is that it's so bad that even the Useful Idiots are seeing it.
lol Whats up Gram its guys here!
Classy!
The market goes insane every decade, its called the boom and bust cycle
This is the government putting a invisible cap on your savings. No more generational wealth if you have to spend the fortune before you go bankrupt. Government doesn't want families becoming rich. Its a threat to them
Weak liberal men like this kid voted for this nonsense.
In Germany you already have to pay 0.5% to your Bank at most Banks
invest on HPE its super solid
Ngl grahams content is 🙂 .
I can’t stop watching your videos, they really helped me in knowing the basics , but I started making huge profits on my investment since i started trading with Mrs Cassandra Brian, her trading strategies are top notch
If this is true… the price of gold should be soaring soon
🙂
Or rather than people spending their money they pull their money out of the bank and keep cash on hand. That's what I would do.
Say”Hi Tiff” to my gf Tiffany. She loves your videos.
Give me my smiley face
“What’s up Graham, it’s guys here” made me laugh, but great info.
Dating back 700 years…..🤣 ok super researcher.
Negative rates have actually been a thing in Denmark for years now, dating back before the pandemic IIRC. That doesn’t stop the banks from making money off of your mortgage though; the negative interest rate is just made up for by other fees attached to the loan :). Also, they’re now charging you a negative interest rate on savings exceeding ~15K USD.
It’d be interesting to hear your take on whether negative rates could cause mass withdrawals (as in everyone going to the bank to withdraw their savings in cash to not lose money). If this happens, banks could run into liquidity problems and we could be in serious problems. I wonder how far negative we have to go for something like this to happen. Negative rates are very scary IMHO. I hope the US never goes there.
Edit: thanks for great content as always, Graham!
Thank you Graham! Great info. 👍
Transitory 🙂
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istg this man is sitting in his damn garage
Whats up Gram, its guys here! Love it! keep up the great work!
🙂 Edit: this is why I don’t have a bank account yet 🙁
Pronunciation nitpick: "Transitionary" isn't a word, but if it was, it'd mean a process of change from one thing to another (like ice melting to water). Jerome Powell said "transitory" (trans-uh-TOR-E) meaning not permanent / temporary.
Let's go, Brandon!
With QE and negative intrest rates, Powell can set price of market as he likes, TINA.
In The Netherlands we have negative rates for years now (€100k limit) so it’s not only applicable for the millionaires..
What's up Here, it's Guys Graham!
Are you looking to a stock market crash or deep correction? Thank you,
Meat is not 8.6% up it’s 75% up price compare to pre-pandemic
what about shiba inu?
If the economy of the maker of world currency goes to negative interest rates the game is over. It won't happen.
9:52 “exasterbating” lol
What, no pumping cryptos anymore?