The potential
for a Fed rate hike this summer and stronger - than - anticipated economic reports released last week caused mortgage rates to end the week higher.
Employment data was extremely favorable for April, paving the way
for another Fed rate hike in June.
And as you can see in the chart above, the Greenback started the week running, thanks to start - of - the - month positioning amid higher odds
for a Fed rate hike and renewed hopes for Trump's tax plans,
Consider locking a fixed interest rate because holding hope
for a Fed rate cuts may prove to be costly.
Markets moved lower for the week, as a solid jobs report paved the way
for a Fed rate hike next Wednesday.
The outlook for inflation — and
for Fed rate hikes to counter the threat — continues to push higher.
When investors begin to focus on the potential
for Fed rate hikes, short - term bonds will almost certainly begin to experience lower returns and — depending on the type of fund — greater volatility than they have in years past.
The statistics sent people into a tizzy, ratcheting up expectations
for a Fed rate hike as early as December.
Briggs said the odds in the futures market
for a Fed rate hike could shift either way, based on the minutes.
Expectations
for Fed rate hikes in 2016 rose Friday after a jobs report that came in far ahead of Wall Street expectations.
The worst case scenario is likely wage growth higher than expected (0.3 percent or higher month over month, 2.9 percent to 3 percent annual), with upward revisions from February, and job growth much higher, all of which would increase the chances
for a Fed rate hike.
The lower for longer outlook
for Fed rates extends investors» reach for yield, and we see it further supporting EMs.
Not exact matches
In the past year, the median outlook
for the
Fed's top
rate in this hiking cycle has risen by nearly 60 basis points to 3.24 percent.
The dollar made most of the running, though, as it turned positive
for 2018 just ahead of a two - day
Fed meeting that is expected to pave the way
for another two or even three U.S.
rate hikes this year.
The change is key as
Fed officials consider 2 percent to be a healthy level of inflation and a key
for continuing to push
rates higher.
The
Fed maintained its forecast
for two more
rate hikes this year, following speculation on whether budding inflation would push it toward raising its outlook to three more increases.
Although last year was favorable
for developing countries, investors remember the painful «taper tantrum» that ensued several years ago, when the
Fed signaled it would begin pulling back on its massive bond purchases that kept
rates low while injecting liquidity in markets.
The
Fed is next expected to raise
rates in June, and at that time it will release new forecasts
for the economy and interest
rates.
The
Fed has forecast a total of three interest
rate hikes
for 2018.
A sea change in economic conditions has pushed interest
rates considerably lower than they were in the past and are likely to stay there
for a while, San Francisco
Fed President John Williams said Friday.
But others were reassured the
Fed was not ramping up market expectations
for more
rate hikes.
Investors were not expecting the
Fed to hike
rates but were looking
for signs of how quickly the central bank may move in the future.
The interbank
rate has been at its lowest level, near zero percent,
for the longest period in the history of the
Fed.
Bond prices were higher, stocks waffled and the dollar flip - flopped after the
Fed's post-meeting statement failed to deliver the clarity markets were looking
for on the course of
rate hikes.
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for millennials Roth conversion in high - taxed states is a very bad idea So the
Fed raised
rates.
With the
Fed likely to signal more
rate hikes, Sit Investment Associates» Bryce Doty foresees bumps ahead
for bonds.
HONG KONG — World stock markets were mixed on Thursday as investors analyzed the
Fed's decision to keep interest
rates unchanged and kept an eye out
for developments from China - U.S. trade talks in Beijing.
The low interest
rates that the Federal Reserve relied on to kick - start the economy, meanwhile,
fed this same dynamic, making it easier
for fast - growing companies to borrow money to grow further — and making bond interest look unattractive compared with stock dividends.
Bernanke himself made clear Monday, as he has in the past, that the
Fed's low -
rate policies are no panacea
for the economy.
On top of the more buoyant outlook
for overall growth,
Fed officials cut their estimates
for the unemployment
rate, to 3.9 percent in 2018 and 2019, two - tenths below the previous numbers.
The way
for the
Fed to support a return to a strong economy is by maintaining monetary accommodation, which requires low interest
rates for a time.
Reaching its 2 percent inflation goal, however, has remained elusive
for the
Fed, and that
rate is not expected to be hit until 2019.
In his speech Monday, Bernanke sought to reassure investors that the
Fed's timetable
for keeping its short - term
rate ultra-low «doesn't mean we expect the economy to be weak through 2015.»
SEE ALSO: A
Fed governor asked a brilliant question about interest
rates, and everyone mocked him
for it >
Also, notwithstanding a silly fiscal policy and the ongoing political impasse, the U.S. economy has some very good things going
for it now, as even king of doom, Nouriel Roubini, couldn't help but note: the
Fed is going to stick to its asset - buying regime
for the foreseeable future, providing a monetary protein shake the recovery still very much needs; the housing rebound is well on its way, which is helping Americans rebuild their wealth and is boosting employment in many states with high jobless
rates; and the shale oil and gas revolution continues to power investment, job creation and revenue growth.
The
Fed's low interest
rate policy has driven more and more money into bond funds as investors search
for higher yields.
July was the seventh month in a row that the
Fed decided to leave
rates where they were, after raising them
for the first time in years in December.
We believe the
Fed wants to raise
rates for other reasons — ones they can not say out loud.
Investors will be looking
for signs that the
Fed is moving closer to raising interest
rates, which is currently expected to happen sometime next year.
Other contenders also have their limits: Germany, the world's largest market
for photovoltaic generation, lowered solar
feed - in tariff
rates last year, and Spain retroactively altered existing solar contracts in December.
Trump accused the
Fed of keeping interest
rates low
for «political reasons» and as a boon to President Obama, according to Reuters.
In the days to come the
Fed will have to prove that a new set of tools
for managing interest
rates will work as expected; see how higher U.S.
rates affect domestic and global financial conditions; and hope that weak world demand and commodity prices do not lead to an overall bout of deflation and force the
Fed to reverse course.
The
Fed raised interest
rates last December
for the first time in nearly a decade, and at that time projected four more hikes in 2016.
On the other hand, if the
Fed decides to delay raising
rates, as the stock market is clearly hoping
for, then it will give U.S. investors a chance to assess China's moves to solve its economic problems over the next few months, and respond accordingly later on.
With no signs of creeping inflation, it doesn't hurt
for the
Fed to keep the pedal on the monetary metal, while removing stimulus too early could risk forcing interest
rates and the dollar unnecessarily higher, putting a damper on the recovery.
If the
Fed is indeed putting off raising short - term interest
rates — perhaps because of an economic slowdown overseas, economic turmoil in Russia, or because of lower oil prices — then that's potentially good news
for the stock market.
Trump, during the primary campaign, as he took on 16 Republican rivals, had called Yellen's tenure «highly political» and said the
Fed should raise interest
rates but would not do so
for «political reasons.»
Scotiabank senior economist Adrienne Warren says condo supply also
feeds demand
for rental properties, a hot commodity in both Toronto and Vancouver, where vacancy
rates are low.
The
Fed is expected to raise interest
rates for the first time this year on Wednesday, and the question is what it will say about the rest of the year.
For all the talk of abnormal times and changes in underlying economic fundamentals, the
Fed is pinning its hopes on a very conventional premise — that the U.S. consumer will keep spending at recent strong
rates, encouraged by low unemployment and the apparent beginnings of higher wages.