Federal Reserve Will Likely Hold Off On Potential Interest Rate Hike This Week

By Scott Colbert, CFA Commerce Trust Chief Economist, Director of Fixed Income - The Commerce Trust Company

June 13, 2016

For those who were concerned that a potential second Federal Reserve interest rate hike this week would roil the markets as badly as the first one did late last year, you can relax.

Fed Chair Janet Yellen is cautious and has taken a rate bump off the table during the June 14-15 Federal Open Market Committee. The 10½% market correction we all experienced in the first quarter certainly got the Fed's attention, and a recent jobs data report did not raise hopes that we've achieved the kind of market liftoff necessary for the next rate hike.

Don't count out a rate bump before the end of the year, however, even with a national election approaching in November. The Labor Department's report on reduced hiring may be a temporary employment condition, but the Fed has stated that it will be "data-dependent" in rolling out a very gradual progression of interest rate hikes. And we believe gradual they will be.

Takeaways:

  • No short-term interest rate bump by the Fed this month
  • Keep an eye on next Department of Labor jobs report due July 8
  • Next Federal Open Market Committee meeting on interest rates is July 26-27
Disclosures
  • Past performance is no guarantee of future results, and the opinions and other information in the investment commentary are as of June 13, 2016. This summary is intended to provide general information only and is reflective of the opinions of The Commerce Trust Company Investment Policy Committee.
  • This material is not a recommendation of any particular security, is not based on any particular financial situation or needs, and is not intended to replace the advice of a qualified attorney, tax advisor or investment professional. Diversification does not guarantee a profit or protect against all risk.
  • The information in this commentary should not be construed as an individualized recommendation of any kind. Strategies discussed here in a general manner may not be appropriate for everyone.
  • Commerce Trust does not provide tax advice or legal advice to customers. Consult a tax specialist regarding tax implications related to any product and specific financial situations.
  • Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. All expressions of opinion are subject to change without notice depending upon worldwide market, economic or political conditions.
Connect with Commerce Trust
Contact us to learn more about how our approach might fit with your financial situation.
Learn more

Is it best to liquidate an investment or borrow against it when you need cash?

Now that the economy is several years past the Great Recession, security-based lines of credit have been growing in popularity.

Institutional Investments

Commerce Trust's Institutional team provides investment management capabilities and services to institutions looking for superior money management.

Yet another reminder in the news – no adult should die without a will

Be prepared! The recent passing of Prince will make headlines the rest of the year as we all learn what a financial fiasco it can be to die without, it appears, leaving a written will.