Topic: Interest Rates
Washington, D.C. – This week, I chaired a hearing in the Senate health committee with key administration officials and COVID-19 task force members to explore what federal, state and local governments need to do to get Americans back work and back to school. You can read more about that hearing below.
The U.S. Department of Health and Human Services announced Tennessee will receive more than $155 million to support COVID-19 Coronavirus testing and contact tracing across the state. Tennessee has done more testing than most states, but even more testing is key to ensuring folks are safe as they go back to work and back to school.
Clarksville, TN – Adding more stocks to your income plan may help offset low interest rates and inflation.
We live in unusual times, with interest rates at historical lows but likely to rise in the not-too-distant future, stocks trading at what some consider elevated levels driven by a years-long bull market, and investors scouring the pronouncements of central banks for clues to what may happen next.
However, one thing remains unchanged – those in or near retirement still have to map out a prudent strategy for generating income in the years ahead.
Tampa, FL – Gas prices leveled-off over the weekend after rising 10 cents in Florida and 3 cents nationwide. Meanwhile, pump prices saw little movement in Georgia and Tennessee.
“We saw sharp overnight increases at the pumps in Florida, due to rising oil prices,” said Mark Jenkins, spokesman, AAA – The Auto Club Group. “It’s possible pump prices in Georgia and Tennessee are having a delayed reaction to recent crude adjustments and could trend upward this week.”
Clarksville, TN – In her Jackson Hole speech, Fed Chair Janet Yellen was not expected to provide any significant clues about what will happen at the September 20-21 policy meeting.
Surprise! Yellen provided a strong hint that the central bank is a lot closer to raising short-term interest rates. Yellen said, “I believe the case for an increase in the federal funds rate has strengthened in recent months.” Take that in context with other evidence.
Clarksville, TN – The FOMC minutes (from the July 26th-27th policy meeting) showed that officials were divided on the timing of the next rate hike. Some felt that the labor market had already tightened enough and that the Fed risked generating financial excesses by keeping rates so low for so long.
Others felt that there was plenty of time to wait for more information and that it would be harder to correct course if the Fed moved too rapidly. Among voting FOMC members, the hawkish view (those wanting to raise rates sooner rather than later) appeared to be a minority.
Clarksville, TN – The economic data remained consistent with moderate economic growth and low inflation. Retail sales figures for July disappointed, coming in below expectations (but partly offset by upward revisions to June).
Preliminary productivity figures for the second quarter were weak (averaging a 0.5% annual rate over the last five years). Jobless claims remained very low. The Producer Price Index fell more than expected and pipeline pressures remained mild or slightly deflationary.
Clarksville, TN – As expected, the Federal Open Market Committee left short-term interest rates unchanged. In its policy statement, the FOMC noted that “on balance, payrolls and other labor market indicators point to some increase in labor utilization in recent months.”
More importantly, “near-term risks to the economic outlook have diminished.” Kansas City Fed President Esther George dissented in favor of raising the federal funds target range by 25 basis points (to 0.50% to 0.75%).
Clarksville, TN – The economic data calendar was thin and reports were of little consequence for the markets. As expected, the European Central Bank left short-term interest rates unchanged and did not alter its asset purchase plans.
ECB President Draghi indicated that policymakers were encouraged by the financial stability following the initial reaction to the Brexit vote. He also said that more information will become available over time and the ECB would act using all possible tools “if needed.”
Clarksville, TN – After a tumultuous summer, the markets seemed to downplay worries in October about China’s economic slowdown and uncertainty over the Federal Reserve timing for raising short-term interest rates.
In fact, it was a banner month for the major equity indices – the S&P 500, the Dow Jones Industrial Average and the NASDAQ – whose positive performance made up for last quarter’s losses, giving the S&P 500 its biggest monthly gain in four years. The global MSCI EAFE index rallied, too, ending the month up 7.7%.
Clarksville, TN – The Federal Open Market Committee left short-term interest rates unchanged, but the tone of the policy statement was unexpectedly hawkish. The FOMC removed the phrase about downside risks from the global economy, but said that it would monitor global economic and financial developments.
It also specifically talked about the decision framework for “the next meeting,” clearly putting a December 16th rate hike back in play.
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