Fixed interest, i.e. interest rates can be fascinating as it gives us a glimpse on how many people perceive the future. Interest rates will go up when we either:

• do well economically, which has happened many times, or
   

• we are very seriously worried about whether borrowers will pay us back as happened during the global financial crisis, or
   

• when inflation goes up a lot.

Until December last year (2018) most people thought that interest rates were on a long-term upswing because things were thought to be going well. I was one of the few people who thought that interest rates were more likely to remain lower.

In December, sentiment shifted decisively negative. The US share market had been falling for two months and fell further and the Australian share market didn’t do well either. When people expect the future to be bad, they expect that shares will go down and interest rates will also go down. That is what happened.

Since then, surprisingly, in Australia share prices have gone up quite a bit in the first three months of 2019, showing that you can have interest rates coming down and share prices going up (at least for a while).

The story is also always slightly different for different parts of the world, i.e. interest rates may rise or fall more in one country than in another country.

However, last week long term interest rates had another big shift downward. 

This is great news for those with mortgages as eventually their rates are more likely to go down but bad news (in the long term if the trend persists) for investors as they will get lower returns for their investments.

As you can see from the table below: