Break In:
After scheduling this post about 24 hours before now, yesterday an almost all day meeting with the local CFA (Chartered Financial Analysts) organization, a local deep level investment organization that found yours truly as President once upon a time, featured the key note lunch speaker of none other than … Robert Kaplan, the current Dallas Federal Reserve Chairman…
There is not a Federal Reserve Member, much less a president that does not have the Economy, interest rates, and notice of the inverted yield curve on his mind… His hour lecture was recorded… using one of the neat handy recorders from our Social Security event…. unfortunately at the time of this writing, the darn recorder would not be friendly with the laptop and share the speech….grrrr
Look for more in our coming Newsletter … and eventually the recorded conversation here … fingers crossed!
Now back to the original post!
It has been a while since we discussed the Yield curve and the inversion there of…
Look for a more detailed article in the coming Newsletter, but for now, the yield curve has inverted again, but this time with greater spread!
As a quick reminder, an inverted yield curve is when longer term rates are lower than shorter, an unusual situation as generally the longer the term the higher the rate so as to adjust/compensate for risk…
Our favorite term and the most useful in our minds is the ten year versus the 90 day yield…
Currently the 90 day treasury is yielding about 2.35% and the 10 year treasury is yielding 2.23% – yep, that’s inverted ….
Chart from St. Louis Federal Reserve
It is hard to see in this chart, and granted, it is a small inversion compared to recent times, but we are inverted and have been for the second week since mid-March, when we first inverted for five days….
Again, more in the coming Newsletter, but we are watching closely!
Have a Great “Inverted Yield Curve Update” Day!
John A. Kvale CFA, CFP
FOMC Meeting and Interest Rate Update from Last Week
Last week, here in our preview of the meeting post, we discussed what the Federal Open Market Committee would likely review via the fortunate lunch with local Dallas Federal Reserve Chair Robert Kaplan and even had direct audio from the event.
We know it’s summer and we know many of you may be taking much needed R and R, but the FOMC meeting last week was surprisingly important.
Important Update Meeting Review
Jerome Powell, FOMC Chair released his decision to NOT lower rates ….
our comments….
From information gathered via the audio and economic data points available at the time, we felt strongly that the FOMC would not LOWER rates, that’s in bold because until just recently, many thought future increases may be in the cards.
However … this statement, in the FOMC press release was deemed to mean rates will be lower at the next meeting, which put wind int he sails of Capital Markets …
Here is the joint estimate of FOMC members for GDP (Gross Domestic Production-broadest estimate of US growth) for the remainder of the year … note an expectation of slightly slower growth for the remainder of the year and into 2020/21:
There is also a Dot Chart that shows where FOMC members expect rates to be over the same time period, but it was a mess and confusing…so we left it out!
Not playing Economist here, but there is a lot of room for lowering or NOT lowering as well… time will tell, but for now the general consensus for the next meeting which is at the end of July (30-31) is for a lowering of rates, at least by most Market Participants or those with a microphone …. Call us skeptical of agreeing at this time….
Bottom Line: No rate lowering but rhetoric that was taken by market participants as a lowering is in the cards sooner rather than later!
There are some nice positives that come with these expectations… Mortgage Rates will likely continue to stay low and may even go lower!
Sorry if we got into the weeds, but we wanted to clarify the slightly blurry statement, reaction, and expectations!
Have a Great “FOMC Meeting Update” Day!
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
jkfinancialinc
street-cents
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Posted in Earnings, Economy, FOMC, Forecast, Interest Rates, Investing/Financial Planning, Market Comments, Political
Tagged FOMC, FOMC Forecast, FOMC Rates, Interest Rates