The Barron's interest rate cover/Powell thoughts/Yen down on BoJ story

I'm sure the bond bulls (I'm bullish/long on duration up to 3 years, bearish past 6 and neutral in between) are all excited about the Barron's weekend cover article titled "Higher Interest Rates Are Here to Stay. What That Means for the Economy." Rather than a contrarian indicator, the piece was much more nuanced and focused only on the fed funds rate and just compared the coming years to the 15 years of zero and near zero rates, not a tough hurdle to clear. In the article, it states we of course have the possibility of the Fed cutting rates next year but "The better question is where rates will settle in the coming decade. The probable answer: below today's target range of 5.25-5.5%, but higher than many economists and policy makers expected a year or two ago, and far higher than the near zero rates of the past 15 years." The article did not speculate on the direction of long term interest rates. By the way, according to my friend Brent Donnelly, who writes Spectra Markets, he back tested Barron's covers and "they're not contrarian, they're random and coincident indicators vs The Economist which is late cycle contrarian" he stated on X. 

I say they better stay 'far higher than the zero rates of the past 15 years' because that and QE did damage to the economy in creating major distortions in the flow of capital that did not go to its most efficient places and instead flowed to anyone with a power point presentation and a heartbeat and got market participants drunk, particularly wasted in February 2021. Having interest rates above the rate of a sustainable pace of inflation is a good thing, it creates discipline in investing and lending, it is a benefit to savers, it creates a lending spread for banks, and it helps to keep prices stable, a key foundation of healthy growth. This all said, the 15 years of zero and many rounds of QE was a huge drug for markets and the economy that is not easy to shake and we're still in the midst of a major transition/withdrawal that will still take a few years to adjust to and not without pain. 

In 2024, just looking at investment grade, high yield and leveraged loans (bank loans), and not including many other forms of debt like private credit, there is about $700 billion of debt that needs to reprice and in 2025 that number is about $1.1 trillion. This on top of all the debt that has repriced in 2023, including all that floating rate where I've seen interest expense for some double this year. My friends at Quill Research highlighted in their Weekly Quill said as of data last Monday "US business Chapter 11 filings were up 141% y/o/y, which took out the prior record of 139% y/o/y set during the GFC." Now many of these are due to the higher cost of capital that has exposed challenged business models rather than due to an economic downturn of note. Imagine if we now have an economic downturn that some rate cuts won't fix, assuming we don't go back to zero rates again. Again, the transition/withdrawal will be painful and will take time but big picture and long term it is a good thing.