Finance news

Rate Probability: Volatile

Last week, rates ended higher than where they began.  The anticipated Jobs Report showed that 94,000 jobs were added in November- but prior month’s revisions took back 48,000 jobs previously counted in September and October.   This week is shaping up to be another blockbuster, with the Fed’s Open Market Committee meeting on Tuesday.  So where will rates end up?

The week ahead will in all likelihood be as volatile if not more volatile than last week, with the headline economic event coming on Tuesday, when the Fed’s Open Market Committee is expected to lower rates yet again.  The big question on everyone’s mind is whether the Fed will make a 25 or 50 basis point move. 

Remember, a cut by the Fed makes many borrowing rates lower - like Home Equity Lines, credit cards, and other consumer loans - but can often have the exact opposite impact on fixed rate home loan rates direct payday loan cash advance. Why? Because a Fed cut often drives inflation, since spending by consumers and businesses generally picks up in light of lower financing rates. As you may recall, inflation is the number one enemy of bonds, which provides a fixed rate of return and is diminished by inflation.

The bottom line: After the Fed announcement rates are likely to be volatile depending on the amount of the interest rate cut and the wording in the fed’s statement.  Hold on to your hats!

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