Market Overview

Bank Expert Thinks Interest Rates Will Rise Very Slowly...But Just Not Yet

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Nate Tobik was recently a guest on #PreMarket Prep, a daily trading idea radio show hosted by Joel Elconin and Dennis Dick.

Among other subjects, Tobik (value investor, bank expert and founder of CompleteBankData.com) discussed his expectations for the Federal Open Market Committee (FOMC) announcement following the two-day meeting.

Interest Rates

Regarding the rise in interest rates, the expert said he does not expect to see a change on Thursday.

September or December sound “somewhat likely,” though. “A year ago, it was the same story,” he explained. But, a year later, almost nothing has changed.

The one thing that has changed is the economy, which is now in a better position, Tobik added. There is “maybe a likelihood” that the Fed will increase the interest rates, “and when they do increase, it is going to be small,” he continued.

“I would say 25 basis points at the most.”

Related Link: Expert Roundtable: Is The Fed Just 'Kicking The Can Down The Road'?

Tobik continued, “I think that the Fed is going to be slow to raise them [interest rates] after that. So, it isn’t going to be a situation where they go up 25 basis points in September, and then another 25 in December, and they keep increasing like that. I think it is something where we see a one-time 25-point jump, and then, it stays flat for a while as the Fed reassesses and sees how the market took it, where things are going.

"And then, maybe another baby step after that. I think this is going to be very long, very drawn out.”

The expert finished his idea with a quote by Ben Bernanke, who said he doesn’t expect rates to normalize in his lifetime. “To me, that’s very significant...so, I don’t know what he expects his lifetime to be, but this is a very long-term thing.”

Shares of Select Sector Financial Slct Str SPDR Fd (NYSE: XLF) are up a little over 0.8% on Thursday.

Posted-In: Ben BernankeAnalyst Color Previews Econ #s Economics Federal Reserve Markets Trading Ideas

 

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