Have Global Interest Rates Peaked?

With the ECB adamant that it will continue to raise rates this would seem to be the most untimely of questions, but there are now signs that this may well be the case.

Firstly this in Bloomberg today:

Federal Reserve to Cut Rates in 2007, Corporate Bond Sales Show

Thinking about refinancing your mortgage in the U.S.? Wait a year. Considering a certificate of deposit? Sign up now. While economists debate whether the Federal Reserve will cut its target interest rate for overnight loans between banks from 5.25 percent, investors have already decided the central bank will reduce borrowing costs next year. Nowhere is that clearer than in the market for floating-rate notes, whose interest payments rise and fall with central bank policy. Sales of so-called floaters are slowing for the first time since the Fed started raising interest rates in June 2004. They’ve fallen to $21.5 billion in September from a monthly average of $35 billion this year through August, according to data compiled by JPMorgan Chase & Co.

Now one swallow doesn’t make a summer, and it is early days yet, but take a look at ten year US Treasury Bonds:

U.S. 10-year Treasuries fell, halting a five-day rally, before a report today forecast to show consumer confidence gained this month.The gains ended on speculation yields at their lowest since March will deter some investors. The yield on the benchmark 10-year note rose 2 basis points, or 0.02 percentage point, to 4.56 percent as of 6:37 a.m. in New York, according to bond broker Cantor Fitzgerald LP. The price of the 4 7/8 security due August 2016 fell 5/32, or $1.56 per $1,000 face amount, to 102 15/32. Bond yields move inversely to prices.

So today we have nudged the yield back up a little, but the rate has been dropping steadily since March. And yesterday Bloomberg were being even more explicit:
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Who gets under the EU umbrella when it rains?

This anniversary guest post is written by the clever and wittty P O’Neill.

For understandable reasons — the addition of 10, and soon to be 12, new member countries, and the constitutional crisis, the European Union has been preoccupied with foundational questions in recent years. But an older concern is working its way back onto the agenda: how to handle an economic crisis in a member country. The last major convulsion was Black Wednesday in 1992. Yet the only real long term impact of Black Wednesday was on the electoral fortunes of the Conservatives, as the legacy of mismanagement proved very difficult to shake. But there was little other damage: the UK economy managed to shed an exchange rate straitjacket that it had never particularly liked and growth recovered quite quickly, and the Eurozone project, then its in infancy, shed its most reluctant large member, setting the stage for monetary union 7 years later. Furthermore, the crisis itself was limited in scope, as it never concerned the ability of the UK government or the country as a whole to pay its bills.
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Inflection Point?

Earlier this month, when Edward wrote

The alarm shot was given by Dalls Federal Reserve President Robert McTeer when he declared in a speech in New York last week that whilst overseas investors now ?finance? the US current account gap, ?theoretically some day that process will come to an end, the flows will turn against us and there will be a crisis that will result in rapidly rising interest rates and a rapidly depreciating dollar.? This prospect, which currently seems remote, should not be taken lightly. It is real, and it is there.

I noted that this prospect had been around for a long time (close to ten years at least) and asked what would constitute a sign that this time might be different.
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