A bit of rate hike would not effect long-term rates at all. It might even reduce them. Bill Gross actually elucidated this theory based on rolling down of yields by bond traders. Interesting.
Your theory is good common sense. People keep waiting for money to get cheaper. When there is a threat of rates going higher, then the borrowers really jump on board.
But zeev, for political reasons(election) and/or market reasons(hope of causing a rally) Fed may lower rates whether they believe they are pushing on a string or not. Why do you think raising rates is the right thing to do and what effect do you think that would have on the market? marv
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