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Power Hour: What’s Ahead for Interest Rates?

September 18, 2012
By: Sara Schafer, Farm Journal Media Business and Crops Editor
Flying Money
  

The dollar plummeted last week. Two market experts discuss what that means for inflation.

Last week, the Fed announced its plan to buy $40 billion in mortgage-backed securities for an unspecified amount of time. Following the announcement, the U.S. dollar took a nosedive.

"We’re flooding the world with dollars," says Richard Brock, Brock Associates. A weak dollar makes our products cheaper, which is good for agriculture, he says.

But, what does that mean for the future?

Power Hour webThe market is signaling you have inflation coming, says Mike Florez of Florez Trading. "Commodities were sharply higher, but the bond market was in decline." He says normally higher-priced commodities with a lower bond market equal higher interest rates.

Brock disagrees. "A plummeting bond market typically signals higher inflation, but I don’t think that’s going to happen this time. If we start raising interest rates with the type of debt we’re building in this country, we will our economy weaken substantially in the long-term."

Brock and Florez discuss interest rates and other current market topics with Al Pell:

 

Part 1

 

Part 2

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