The FOMC released its notes from the June 13th through June 14th meeting. Fixed-income investors have had an interesting year, as rate hikes have put the income back in “fixed income.” Still, this high-rate environment remains complex and challenging. The minutes from FOMC meetings can sometimes leave behind clues. These clues are essential for investors hoping to read the tea leaves.
The CME’s FedWatch tool puts the likelihood of another hike in July at 89%. With zero interest rates in the past few years, the markets have had a challenging first half of the year. Despite these challenges, US stocks ended up in the green.
The FOMC Low Down — Will the Rate Hikes Continue?
VettaFi head of research Todd Rosenbluth said, “While the Fed paused its rate hiking program at the last meeting, some advisors think more is coming in the second half. There’s a lot of uncertainty about how to position client portfolios for the next six months. The good thing is that there are a lot of tools for advisors to use to either protect against rising rates or to seek out income to support client objectives.”
Despite the pause last month, inflation remains persistent, and Fed Chair Jerome Powell continues to target 2%, which could take some time. At an ECB forum on Central Banking, Powell stated, “I don’t see us getting back to 2% this year or next year.” The core personal consumption expenditures price index rose 4.6% in May, which was less than expected.
