Most interest rate forecasters are wrong most of the time.
The chart below is from Jeff Gundlach’s presentation on Tuesday, comparing the US 10-year yield to median economist forecasts over the past five years.
The black line is the 10-year yield, and the coloured lines are the paths that economists thought rates would take.
Clearly, these forecasters were wrong most of the time, as there were only a few instances of convergence between both lines.
In 2012, forecasters were hugely bleak about the economy, and thought that interest rates would collapse the whole year. Rates ended the year higher than where they started.
Last year was particularly bad, when strategists became too optimistic that the Federal Reserve would hike rates.
This year, forecasters again thought rates would rise and as rates fell, so did those forecasts, which have now converged with interest rates.
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