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Changing Interest

By May 2, 2014CMF Blog

The Fed announced Wednesday that its bond buying will decrease by an additional $10B per month to $45B, down from a high of $85B as recent as December 2013. From our vantage point, the decrease in external stimulus seems to have a limited impact on the economy.

With regards to Fed activities, we have moved our focus from quantitative easing to paying close attention to:

  1. The language that Fed governors use related to any movement in the federal funds rate from the current .025%; and
  2. Changes in the average maturity of the Fed’s overall portfolio, which, as reported recently in the Wall Street Journal, has shown a shift from shorter to longer duration securities.

Our view is that interest rates will remain low for some time.

 

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