QE Over…Interest Rates Down?

Big news is that that Federal Reserve announced the end of Quantitative Easing (QE). Interest rates are supposed to spike up now, right?

They certainly haven’t yet. Of course this is only the first day after the announcement. Short term movements can send markets in any direction, and who knows if rates may actually rise over the next year.

But my point is that there is never a situation where you get “direct” and “predictable” market movements, like many pundits say will happen. In fact, interest rates have dropped so far this year, and are down quite a bit in the last few weeks.

The standard narrative is that the moment QE ends, interest rates will shoot up (maybe even before QE ends because the markets anticipate the future). The rise in interest rates will make other markets, like the stock market, go down.

……and, as usual, the immediate result is nothing like this at all.  Why is this important? Because it goes to show that you can’t make money trying to follow these narratives and trading based on them. You are more likely to hurt yourself than help yourself.