Today ends a two day meeting of the FOMC. Most investors, including ourselves expect Yellen and Gang to continue slowing bond purchases. As a quick review the FOMC embarked on an $85 billion per month bond purchase to lower mortgage and other interest rates to help spur the economy. This was nick named Quantitative Easing.
Yellen Gets the Goldilocks Treatment — SO FAR
Most expect the FOMC to continue to turn the volume down on the monthly purchases to a new rate of $55 billion monthly (currently $65 billion) in their announcement today.
The current US Economic numbers support the continued withdrawal, here is what is amazing to us.
FIXED INCOME INVESTORS GIVE THE FOMC A BREAK
Look what happened to the 10 year Treasury Yield when the FOMC initially announced they MIGHT start slowing the purchases in the middle of last year (2013): Yikes !
Granted this was from a VERY low base of 1.60%.
All other things being equal rates should continue to rise with less stimulus and a better economy.
Here is where we are today with the 10 Year Treasury (Voodoo trend lines left in place)
Time will tell if fixed income investors continue to play ball!
Have a Great Day!
John A. Kvale CFA, CFPhttp://www.jkfinancialinc.com http://www.street-cents.com 8222 Douglas Ave # 590 Dallas, TX 75225