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4 Jul 2019

Interest Rates: How long can rates remain low?

History tells us that rates (using US long term government bond yields as a proxy) can remain low for decades at a time.

Click for chart.

The biggest impediment to rising interest rates is the quantum of debt and this has not changed for over a decade.

In January 2019 Bloomberg published an estimate of total global debt at US$244 trillion across households, corporations and governments which is more than 3 times the size of the global economy.

So, can growth assets prices (for property and shares) still go higher from here?

Yes is the answer but don’t trick yourself into thinking that a financial catastrophe will not follow.

Financial catastrophes (such as stock market crashes which are defined as a fall of more than 20% from recent peak) are never a question of if but when.

For investors, the key is to remain invested according to your appetite for volatility and then, when fear and panic take hold during the next financial catastrophe, to take advantage by buying more quality assets at discounted prices.


At Newealth we are always looking to support and promote our clients wherever possible and if you have any ideas or comments, please feel free to email me or to call me on +61 2 9267 2322.

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