Quote:
Originally Posted by bizaro86
Right, exactly. I probably should have used the phrase "makes the market expect" vs "seem more likely" as I agree 1 hike doesn't necessarily change the probability of more (except as an indicator of the BoC willingness to move at least once). But I do think the first hike makes future hikes more likely to get priced in, steepening the curve.
But really, what do I know. If I could predict interest rates I'd be bidding on that giant yacht they seized from the oligarch...
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Yeah, well don't feel bad because you are not alone there.
One would think that predicting changes in interest rates would be much easier than predicting changes in the stock market. But it turns out that it is actually much more difficult.
One study that I recall found that not only were most bond managers unable to predict the
amount to which future interest rates would change with any degree of accuracy, but that about 80% of the time they got the
direction wrong! (meaning they weren't even able to correctly predict whether they were going to be higher or lower).