As you’ll see below, the trends remain downward, except the five-year swap rate (the red line), which has gone up since hitting a low of 2.28% in early April. But, it’s only up by 40 points. The big question on the minds of many is, “Are we seeing or have we seen the bottom of this cycle?”.
As an avid chartist, my read is that until we see a break in the cycle of lower highs and lower lows in the long-term trend, it’s still a down market for interest rates. For those interested in Medical Equipment Finance, the five-year swap rate is the most relevant, and it would have to break ‘resistance’ in the high-threes to signal a reversal of the trend.
You may recall from a previous post that lenders apply a margin/risk uplift of about 2% to the swap rate, making the current five-year rates to creditworthy Healthcare and other businesses in the high-fours.