We may be near a secular low in interest rates which may already have been established in the first half of this year. It is possible for interest rates to stabilize or continue lower from here but the next major move should be higher. Government funding and empty promises will collide with higher interest rates and unless attitudes change the result will not be pretty. We are still positive on equity markets and the U.S. dollar and generally bearish on commodities with deflation continuing to unfold.
We have been fortunate to experience two of the greatest bull markets in both equities and interest rates. However all good things must come to an end and this one is no exception. Although we have had 6 years in a row of positive returns in the S&P500 the rally can continue as the last phase can sometimes be the most powerful one. The key will be discerning the phase we are in and trading it successfully. A secular rise in interest rates combined with a falling stock market will dramatically alter the world of traditional investing.