John Kosar, CMT, Forecasts “Big, Fast Rise In Interest Rates”

John Kosar, CMT, of Asbury Research, published a column in Forbes on Monday forecasting the effect of increasing inflationary pressure on the Fed's ongoing interest rate hikes. 

"U.S. interest rates have actually been been rising for a while, now, but at a glacier-slow pace that many people would have not noticed unless they were in the business of tracking them like we are.  Our research strongly indicates long term US interest rates are at a secular decision point, one that is likely to eventually be resolved by significantly - if not surprisingly -- higher borrowing costs over the next one to several quarters," writes John. 

"Although rising interest rates may indeed have a more gradual effect on the broader U.S. economy, they will probably have a more immediate effect on consumers financing debt at a floating rate via credit cards, mortgage and home equity loans, and student loans.  Consumer spending currently comprises 68.0 percent of the U.S. economy, and U.S. household debt has risen over the past 18 months -- especially in floating credit card debt which is up 2.6 percent according to the Federal Reserve Bank of New York, Center for Macroeconomic Data.  These factors support our expectations for a sharp and significant rise in U.S interest rates, particularly in long term rates.  Should this occur, we would expect it to have a meaningful adverse effect on the US economy in 2019, as well as on U.S. equity prices which are strongly influenced by economic trends."

Read the full column on Forbes here