Interest Rates Just Made a Move What to Expect for 2025
Ken McElroy Show
Ken McElroy
4.8 • 692 Ratings
🗓️ 21 February 2025
⏱️ 57 minutes
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Summary
Ken and Danille McElroy talk with George Gammon to break down the latest movements in the treasury market, interest rates, and inflation. They explore historical rate-cutting cycles, the unexpected impact of global capital flows on real estate, and what investors should prepare for in 2025.
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ABOUT KEN: Ken is the author of the bestselling books The ABC’s of Real Estate Investing, The Advanced Guide to Real Estate Investing, and The ABC’s of Property Management. With over two decades of experience in real estate investing, Ken McElroy is passionate about sharing the good life by helping real estate investors grow and prosper. This podcast is a place for Ken to discuss numerous topics connected to real estate investing, including finance, budgeting, the entrepreneur mindset, and creating passive income. Ken offers a wealth of personal experiences, practical advice, success stories, and even some informative setbacks, all presented here to educate and inspire. Whether you’re a new or seasoned investor, the information and resources on this channel will set you on a path where you and your investments can thrive.
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Transcript
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| 0:00.0 | What's going on with the Treasury market? |
| 0:04.6 | You know, for some reason, the Fed funds is going down. |
| 0:08.2 | The Treasury has gone up almost a full point since last September, I think it was. |
| 0:13.7 | It's come down pretty substantially. |
| 0:15.7 | It's come down almost 40 basis points in the last month or so. |
| 0:19.8 | So now we're back to the point, Kenny, where the 10 |
| 0:22.4 | years almost close to Fed funds again and yield curve is almost flat. I was saying last night |
| 0:28.5 | on a video, who knows, it's so crazy out there. We could go, we could invert again. I don't know. |
| 0:34.9 | It's just, it's completely nuts. But I don't know what's going to happen, but I can tell your audience what has happened in the past. And this is very common in rate cutting cycles. And I don't think most people realize that because they, you know, they don't have the time to study these things in great detail. But when you go back and look at the rate cutting cycle, let's just say in 2007 and 2008, the 10-year treasury yield went up from March of 2008 to July of |
| 1:02.8 | 2008 by 100 basis points. So think about that. That we were, we started in the GFC, the recession that is now known as the global financial |
| 1:13.0 | crisis. That started in January of 2008. So during that timeframe, we were already three |
| 1:20.4 | months into the GFC and interest rates at the 10-year treasury went up from March to July, like I said, by 100 basis points. |
| 1:30.4 | And by the way, if you read the Wall Street journals from back in July, which I really like doing, and you ask, well, why do they go up? |
| 1:37.2 | Because inflation expectations went up. |
| 1:39.5 | Because the CPI started off at 3.5% when the Fed started dropping rates September 18th in 2007. So 3.5%. |
| 1:47.5 | Then the Fed dropped rates. They dropped rates. Very similar to what they did in 2024. |
| 1:54.0 | And then the market thought, well, my gosh, they're dropping rates too much because the CPI is |
| 2:00.3 | coming out and it's going up and up and up. |
| 2:02.7 | Does that sound familiar? |
| 2:04.4 | Yeah. |
| 2:04.7 | And the CPI went from 3.5% to July of 2008 when it was 5.6%. |
| 2:12.9 | So think about that. |
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