The level of interest rates is among the most important macroeconomic factors that guide investment analysis as interest rates directly affect the returns in the fixed-income market. Forecasting interest rates is extremely difficult. However, there are four fundamental tools we can use to help determine the level of interest rates. (see page 369)

For this discussion, list each of the four tools, discuss the state of each in the current economy, and what direction they point interest rates toward in the near term (1 year) and the long term (greater than 1 year).