Category Archives: Interest Rates

On December 16, 2015, the Federal Reserve announced that it was raising interest rates. More specifically, it raised its target for the so-called federal funds rate. Before talking about just what is the federal funds rate, we’d like to point out what it is not: It is not mortgage rates It is not bond interest rates It is not muni bond rates It is not T-Bill rates It is not CD rates It is not the ...

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Over the weekend, the Greek Prime Minister broke off further talks with the European Union group over restructuring its debts. The European Central Bank froze funding to Greek banks, forcing them to shut their doors for a week to prevent a widespread bank collapse in Greece. This morning, stocks in all global markets are down, albeit not much more than we sometimes experience from time to time. US interest rates ...

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We get electronic alerts from our clients' security custodians (Schwab and Fidelity) whenever something happens that they judge warrants our attention. Last night, we received 233 separate alerts -- each of which delivered the news that Moody's had upgraded its credit ratings on a particular municipal bond. The ratings involved school district voter-approved general obligation (GO) bonds, and the ratings went from the existing Baa1 up to A3. As we have ...

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Imagine you could make a time-jump a few years out into the future. What might you expect to be different? You'd know what the iPhone 7 looks like. You'd know whether the Ravens and Niners had a rematch, and who won. You'd also know the level of interest rates after the Fed winds down its bond-buying program. While nothing is certain, most investors assume that interest rates will be higher in a ...

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The Federal Reserve Board of Governors today released minutes from its January meeting, at which it apparently discussed the fact that it might not be able to continue its current pace of bond market manipulation. In case you've forgotten...the Fed is buying up hundreds of billions of dollars of public and private bonds in order to artificially hold interest rates low. It pays for this by flooding bank vaults with ...

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Summary of conversation we have with clients a few times a week: Aren't you worried about interest rates going up? The ten-year treasury is only paying 1.7%...rates are probably probably going to go up, and bond prices decline when interest rates go up. Why are you buying 10-year muni bonds? Simple answer: Because the muni bond yields are high enough to provide us a fair rate of after-tax return, even if ...

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We get calls from journalists from time to time. Here are links to a few of our thoughts, as reported by online news sources: FoxBusiness had Rick as a guest again, talking about investing in 2012. "Invest cautiously in 2012. Preserve capital." The Chicago Sun-Times interviewed Rick about higher-yielding investments. September 2011. "In his view, the stock market is priced for 'a continued and unbroken economic recovery.”'But the bond market 'is priced for a ...

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Nov
03

The monetary printing presses, that is. As expected, the Federal Reserve Board of Governors announced today the resumption of its "Quantitative Easing" program. That's a nice academic euphemism for "printing money." The Fed will be reaching out into the capital markets and buying six hundred billion dollars of Treasury bonds. For reference, that's about half of current annual federal borrowing. The objective of the policy is to pull down longer-term ...

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Rick appeared on CNBC to talk about Bernanke, Fed policy and the bond market on August 30.

Gentle Ben Bernanke gave a big speech yesterday at Jackson Hole. There were two main themes in the talk. The first was an overview of where the economy has come since the Panic of 2008. In paragraph after paragraph, he gives the little bit of good news, followed by an immediate, "however..." It's the "howevers" that have concerned us and continue to. His rhetorical pattern reminds of dealing with teenagers. "Hey, ...

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