Interest rates should start rising at the end of this year or in the first quarter of next year, experts from Loomis Sayles Investments said at a luncheon in New York on Tuesday.

“I’ve been guessing we’re in the foothills of a long 20-year rise with cyclical interruptions,” said Dan Fuss, who manages the Loomis Sayles Bond Fund.

David Rolley, the head of fixed income for Loomis, said he thought QE2 was still the most important factors explaining why the market is in such good shape. It was like “a double shot of expresso” to the economy he said.

The goals of QE2, to create jobs and lower the dollar to replace a consumption-driven economy, seem to have worked out well. Evidence of this is how much “the Germans and the Chinese hated it,” Rolley said.

Everyone, he said is expecting Chinese growth will continue, and that’s the discounted information that seems to be baked into the world’s economic outlook.

Meanwhile the stock market is showing great value, according to Loomis’ equity strategist Richard Skaggs, who is predicting that, driven by earnings, the Standard & Poor’s 500 will reach 1400 by the end of the year. Small caps and mid cap look like have been and may continue to outperform large caps because they’re easier to grow, he said. Meanwhile emerging markets, which have paused for awhile, have delivered great returns over the past decade. Skaggs says the typical bull market lasts three years and we’re only in the second year.