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The primary policy tool which the Federal Reserve uses to influence the economy is the Federal Funds Rate (or “Fed Funds Rate”), the target interest rate at which commercial banks can borrow or lend reserves overnight.

When Federal Reserve Chair Jerome Powell spoke on December 1st in his final public comments before the blackout period leading up to the Fed’s December 14th policy meeting, the tone was hawkish.

Equity markets have enjoyed a tremendous November rally that allowed the S&P 500 to break out of its downtrend pattern and retest the July 31st peak.

“Don’t fight the Fed” is a stock market mantra that has proven true thus far in 2023. The Federal Reserve’s campaign to halt inflation has been implemented by 11 interest rate hikes amounting to a cumulative 5% increase in the Federal Funds rate.

October 26, 2023 It’s rare for the bond market to dominate headlines versus stocks, but that is the case lately as the 10-Year US Treasury yield has tested 5%. While short term US Treasury yields have been well above 5% for months, the long end of the yield curve has been lower than the short…

Heading into 2023, there was near-unanimous consensus from Wall Street that the US economy would veer into a recession. Yet throughout the year, US GDP has only strengthened thanks to persistently strong consumer spending.

By Dr. George Calhoun – Vestbridge Advisors, Inc. Advisory Board Member Executive Director of the Hanlon Financial Systems Center

“Columbus dreamed of an unknown shore at the rim of a far flung sky.”
– EDGAR ALBERT GUEST –

Market expectations have shifted to embrace the “soft economic landing” narrative, however the economic strength that has postponed a recession has also given the Federal Reserve (the “Fed”) leeway to keep interest rates elevated for a longer period.

By Dr. George Calhoun – Vestbridge Advisors, Inc. Advisory Board Member Executive Director of the Hanlon Financial Systems Center