Monday, January 4, 2016

  • The Fed raised target interest rates last week and the sky did not fall. Without boosting anxiety or draining much liquidity from the system it moved rates to within the higher target range. Yet interest rates still remain historically low; the median projected target for short-term rates in 2016 is 1.375%. 
  • Long –term interest rates remained stable as markets avoid risk by piling into US Treasury and agency-backed mortgage securities due to the oil price collapse. And remember that the Fed will likely maintain the current size of its securities portfolio for at least 6-12 more months, keeping a lid on mortgage rates.