Federal Reserve Meeting
The biggest part of the week is the Federal Reserve’s meeting and what their announcement will be. It’s not what they are going to do, which is likely raise rates, but what they will say that is very important. The Fed right now, in our opinion, is the most likely driver of the next recession. The economy is growing strong right now. However, the Fed does have a history of stopping the party when no one asks them to, so to speak. The fear is not that a rate increase will push us into recession right now but what they will talk about over the next year. Will they raise rates to the point where it hinders the economy? Will they hinder borrowing? Will they increase short term rates over long term rates with the inverted yield curve? These are the questions we are interested in. It’s also important to note that housing starts are at a high of this current expansion. The rise and fall of housing starts are good indicators that we could go into a future recession. People will stop buying houses if interests rates increase because they aren’t interested in paying a higher mortgage. Currently interest rates aren’t impacting this but you could see it in the future if the rates continue to climb.
The 10-year U.S. Treasury almost made a record high last week. The high was 3.11% and we made it to 3.10%. That matters because it is a key indicator of investor confidence going forward for people investing their money long term. That’s one more indicator on top of the tariff news that you’re hearing. If the long ends keep going up it gives the fed a lot of room to increase the short end.
Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
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