Hello,
I absolutely wasn't saying you were being contrarian for it's own sake, just that it's something to be avoided. I don't necessarily disagree that rates are likely to stay low for awhile for political reasons, it's just that I have a hard time knowing how long that will be. The arguments presented in the paper for higher rates are not especially cogent, and I definitely agree that there would be serious political consequences to higher rates, as well as that the gov't/BOC will only be willing to take those consequences in the face of persistent and noticeable inflation.
Which is why the risk reward feels asymetrical to me. If 5 year money for one of my residential investments is at 3.5%, I can save less than 1% per year by going short on my mortgages. That won't make any difference to me in the long term. But if I was floating and rates spiked to fight high inflation, I would be at risk.
Huge inflation would likely be a significant benefit to me, as I own significant hard assets supported by fixed rate debt, and work in a commodity producing industry.
In the same way, I'm staying short with fixed income investments. If long bonds pay 2%, but have huge convexity, there's limited upside (presuming rates stay positive, I suppose) but potentially significant downside.
Regards,
Michael