Are High Interest Rates the New Normal?

Jun 13, 2022

By The Small Exchange

Overview

Mike and Frank use historical data to investigate whether high interest rates are here to stay, and they use futures and options to trade it. They compare the current market for short-term interest rates in the US to over a decade's worth of historical prices, and they find that the market is at highs unseen since 2008; but this must be qualified by the fact that rates traded between 3% and 6% for the majority of the decade prior to 2008. This information leads to a conversation around whether or not rates over 3% are in fact the new normal.

The futures dudes show you how to contextualize and potentially trade the extreme, and Frank closes with some words on managing or defending losses if the market doesn't go your way.

Contents

0:05 Are High Interest Rates the New Normal?

0:50 US Interest Rates are at the Highs Since 2010

2:25 The Last Time 2YR Rates were Over 3%

5:20 Is this an Outlier or the Start of a New Era?

6:40 Interest Rate Projections

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