Fed Puts Fewer Interest Rate Hikes in Wall Street’s Stocking

The stock market rallied strongly on Nov. 28 as Federal Reserve Chairman Jerome Powell made a dovish comment. Powell said that rates are “just below” the Fed’s targeted neutral level, which most Fed watchers consider to be 3%. This came after Powell called rates a “long way from neutral” on Oct. 3, provoking a major reaction in the financial markets.

Wall Street read his latest remark as a signal that the once-a-quarter rate hikes will stop sooner than expected. The Fed plan was to raise rates four more times. We expect hikes for sure in December and March, and likely in June. But the September 2019 hike looks to be off the table. Continue reading “Fed Puts Fewer Interest Rate Hikes in Wall Street’s Stocking”

What Now for Borrowers and Savers After the Fed Move?

Now that the Fed has raised the effective federal funds rate a quarter of a percentage point to 0.9%, and indicated its intention to raise twice more this year, the effects will ripple out to most borrowing rates, but only to some savings rates.

Borrowing Rates

The bank prime rate, which is the short-term borrowing rate available to the most credit-worthy customers, has already fully adjusted. The prime rate usually rises within one day of a Fed hike. Ditto for home equity lines of credit, which are tied to the prime rate. Continue reading “What Now for Borrowers and Savers After the Fed Move?”

Brexit Vote Puts Damper on Interest Rates

10-year T-notes at 1.4% by end ’16

The vote by Britain to leave the European Union has completely changed the outlook for interest rates. Rates should stay low for an extended period of time as U.S. Treasury notes and bonds remain important safe haven investments in the face of uncertainty over growth in Europe and Japan.
Continue reading “Brexit Vote Puts Damper on Interest Rates”