Category Archives: Interest Rate Monitor

Interest Rate Monitor: December 2017

So far, all indications are that interest rates are due to be increased by the Federal Reserve Bank.  There will be many explanations for why interest rates should be increased, however, we believe, as demonstrated by over 40 years of evidence, that the Fed follows market rates and gives an economic justification for their decision afterwards.

Interest Rate Monitor: October 2017

In our August 2017 Interest Rate Monitor, we said the following:

“…we’re holding to the idea that the current range in the trend will remain, until proven otherwise.”

As seen in the chart below, the range that we spoke of is holding strong, for now.

Interest Rate Monitor: August 2017

When it comes to financial markets, the trend is your friend.  In the case of interest rates, more specifically the 3-month Treasury, the trend is up.  Our position is that the free market movement of the 3-month Treasury is the lead for what we can reasonable expected from the Fed Funds Rate which is managed by the Federal Reserve.

Interest Rate Monitor: June 2017

In our last posting on March 13, 2017, we said that the financial markets were widely anticipating that interest rates would increase.  However, we persist in the belief that the leading indication of interest rate direction comes from watching the direction of the 3-month Treasury, which is a market driven instrument.  As reflected in the chart below, we’re in for a bumpy ride ahead.

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Interest Rate Monitor

The markets are anticipating an interest rate increase at the next Federal Reserve meeting on economic policy and many could legitimately say that this anticipation is what drives the short-term rates higher. 

However, history is on our side on this matter.  As pointed out in previous postings, Federal Reserve rate policy always follows the actions of short-term rates as demonstrated in the last comparable cycle in interest rates from 1953 to 1980.