Below is a brief article from Jack Harty on interest rates.
On 5-22-19 the Fed released minutes from its most recent meeting that concluded on May 1 with no increase in short-term interest rate.
The Fed minutes suggest it will take a “patient approach” in determining whether rates should be raised at future meetings. The CNBC report below summarizes:
Fed minutes: No rate moves are coming ‘for some time’ even if the economy improves
“Members observed that a patient approach to determining future adjustments to the target range for the federal funds rate would likely remain appropriate for some time, especially in an environment of moderate economic growth and muted inflation pressures, even if global economic and financial conditions continued to improve,” the meeting summary stated.
“…[S]ources of uncertainty remained. In light of global economic and financial developments as well as muted inflation pressures, participants generally agreed that a patient approach to determining future adjustments to the target range for the federal funds rate remained appropriate.”
It is fair to say that the Fed has no current intention to take the punch bowl (read: low interest rates) away from the party (read: economy) in the short-term.
Over the past seven months (since November 2018) the 10 Yr Treasury bond yield has fallen almost 100 basis points.
As of 5-23-19 the entire Yield Curve is inverted, i.e., Short-Term Treasury bond rates are higher than the 10 Yr Treasury Bond rate (2.31%). Surely some thanks should be given to Brexit and the Trade War with China.
Some market watchers consider an inverted yield curve to be a harbinger of recession - stay tuned. In the meantime, enjoy the ride on the low-interest-rate train.
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