The bond markets continue to be a bit of an enigma at the moment. The interest rates on short-term securities have been on a relentless rise since the beginning of 2015. The chart below shows a price history of 3-Month LIBOR (London Interbank Offering Rate). This is the rate banks charge each other to borrow money for 3-months.
Once the rate started to rise from its low, it did so aggressively. After a sharp move at the end of 2015, rates held steady for about 6-months. Following that consolidation, short-term rates rose from about 0.65% to 2.33% which is where they sit today. Like in 2015, rates are trading sideways marking time. 6 months have passed and now short-term interest rates have every reason to move higher. But will they?
