Bill Gross is hiking up cash holdings, from -7% in Oct 2008 to +7% now. Im not sure if this should be construed as a strong bet that rates are going to go up … Fed policy is still accommodative and will likely be like that for some time.
Click here for Bill Gross article
With the Fed Funds Rate at practically zero, and the 10 year around 3.5%, the bullish case for interest rates is weak. The bearish case of skyrocketing inflation and a Fed hiking rates seems years away at best. CPI bottomed at about -2.0% in the middle of this year and the recent reading is about 1.8%. Still mild by long term measures, but a situation that is worth monitoring. It is also notable that the deflationary numbers in the middle of this year were due to drastically lower energy prices compared with the middle of last year (when Crude peaked at nearly $150 per barrel).