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Unsurprisingly, the Fed raised rates again yesterday. A day before, Eric Sprott had this to say about the expected rate increase:
My first thought is: OK, bring it on, baby! Let's have that rate increase. Let's get it over with here. Because typically, I don't think the Fed really could possibly read things as bullish as it might have started the year off thinking. Because it's really not quite coming together. Housing's weak, auto's week, retail sales are nothing special, you've got inflation affecting lots of areas... We have lots of reason for the Fed to be expressing concern. So, fine... Let's bring it on, let's see what happens. And I'm pretty certain that gold and silver will survive yet another rate increase. And prosper, quite frankly.
Janus Henderson Investors similarly expected rates to be raised at this week's meeting, as well as 2-3 more this year, but doesn't think it bodes well for fixed income investors:
Another reason why we are seeing rates increase too is the Fed is on a, they are taking liquidity out and they are raising rates as well. So we expect anywhere from two to three more rate raises this year, with more on the back of that next year as well. So we are now finally seeing a rising rate environment, which isn't the best scenario for fixed income investors... We think in a rising rate environment where spreads are widening, it is going to be harder to get a positive total return in fixed income.
After the meeting, Lars Christensen commented on the FOMC's decision, which he called more hawkish than meets the eye.
Calling this "the most anticipated Fed move in the last 2 or 3 years," CME Group discusses the possibilities of what could come out of the FOMC decision and whether or not inflation can be contained.
Mark Hamrick, Washington Bureau Chief, Senior Economic Analyst at Bankrate.com, joined Tematica Research this week for a truly informative discussion of the economy, the Fed Chair, and interest rate expectations.
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