“Higher for longer” is the phrase and marching order from the Federal Reserve. At the Fed’s September meeting, interest rates were left at their current rate of approximately 5.25%. The conversation has shifted toward how long rates will remain elevated. The Fed’s projections now indicate that rates will likely remain elevated through 2024, with a reduction in rates providing relief in 2025 and beyond. The elevated interest rates are challenging the patience for many, but bond buyers are seeing meaningful returns from recent purchases. As rates normalize over the next several months, the issue remains a topic of primary concern.
Looking forward, a potential US Government shut-down looms to start October. The term “shut-down” has been used to describe over 20 budget disagreements during the past 40 years. The severity of these events tends to be short lived, and essential services to protect the public are rarely affected.
For more, our partners at LPL discuss "Seven Things to Know about Government Shutdowns".
Best,
Garrett