In the News
Last week, the Fed came out with their interest rate decision and Chairman Powell spoke about future plans. Here were the key takeaways:
-
Fed will begin tapering their bond monthly bond purchases
- They will begin with a monthly reduction of $10billion less in Treasury bills and $5billion less in mortgage backed securities
- Powell said inflation is “transitory” again, but mentioned how they expect inflation to run through end of next year.
The economic definition of inflation is an increase in monetary supply, the result is higher prices of goods and services due to the lower purchasing power of your savings. The Fed has increased the total monetary supply by over 40% in the last 2 years alone. Unless they can fix economic problems without keeping the money printer on, I’m not too optimistic on inflation being “transitory”. Also, couple that with broken supply chains and it’s easy to see why consumer goods have seen a rapid increase in prices.
We also saw a “dip” in unemployment. The numbers reported a dip from 4.8% to 4.6%. These numbers are misleading, however. They only include those who are actively looking for work in the past 4 weeks. So the unemployed that have given up on job searching, about 6 million people, were not included. If they were, the numbers would be closer to 8%-9%.
Here is what’s in the news for this week:
Wednesday:
- Consumer Price Index
Short week. Thursday is Veteran’s Day.
Chart Check
Last week was a great relief on rates. We broke through the downtrend that we have been stuck in since September
Support/Resistance
We have reclaimed some territory. I do expect a slight drop to retest the support line but if we break above the resistance line, good times ahead. The markets reacted well to last week’s news. Although it wasn’t good that the FED was going to start tapering, it was good that they extending the bond purchasing program through 2023. Also, markets were looking for higher unemployment rates (even though it’s always higher than what’s reported).
I’m locking rates in. With the supply chain issues currently in play, CPI numbers Wednesday should show prices have increased. But it is very nice to see the bounce back from the lower support lines on the chart.
Please feel free to reach out with any questions with regards to rate and my thoughts on them. I’m more than happy to help out any way I can.
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