Janet Yellen gets the Goldilocks treatment, SO FAR

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 !

10 Year Yield

10 Year Yield

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)

10 Year W Trendline 3-17-14

Time will tell if fixed income investors continue to play ball!

Have a Great Day!

John A. Kvale CFA, CFP

http://www.jkfinancialinc.com
http://www.street-cents.com
8222 Douglas Ave # 590
Dallas, TX 75225

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