The Fed likes 0% - for obvious reasons. They just lowered their benchmark overnight lending rate to 0 last Sunday. And on Monday rates farther out on the curve dutifully followed suit and dipped precipitously. However, I just noticed that the 10-year Treasury has pushed above 1% in Tuesday’s overnight trading. So what the Fed wants and what lenders farther out on the interest rate curve are willing to lend money at may prove two different things. This situation is sometimes characterized by pundits as “the Fed losing control” of interest rates. Whatever you call it, it probably doesn’t bode well for the economy. Both of my multi-sector bond funds fell over 1% on Tuesday - a sign that global rates were already backing up some.
For whatever reason, the real asset / resources camp seemed to awaken Tuesday following more than a week of severe bloodletting. One such fund I own, PRNEX, was already down about 45% YTD going into the day (I know - hard to believe). Even though oil slid further Tuesday, the fund jumped 5,5%. Why? A guess is that building materials, agriculture and other commodities rose enough to offset oil’s decline. Another already DOA holding, OPGSX (miners), experienced a near 10% jump Tuesday. Both funds perhaps demonstrate that it really is possible to “bring back” the dead.