It is beyond us why so many people kept thinking the Fed would pivot or pause raising interest rates when inflation is still raging. If anything, the irony is that the Fed hikes have done little to slow key areas of inflation such as food and energy. Energy alone is expected to rise dramatically as we head into winter season and the Ukraine situation continues to drag on indefinitely.
The Fed raised 75 basis points, will examine inflation data over the next month then adjust again in December. We predict inflation will remain high and the Fed will need to ponder another aggressive hike or wait until the following meeting.
Here are the tentative FOMC meetings for 2023
January 31-February 1
March 21-22
May 2-3
June 13-14
July 25-26
September 19-20
October 31-November 1
December 12-13
January 30-31, 2024
Since the next meeting is December 13-14, winter will not have fully hit by that time and energy prices will likely explode shortly thereafter, the Fed may be put into a position of receiving high inflation numbers for December and/or January and force to raise again at the February 1 meeting.
We continue to buy and ladder more T-Bills. We actually pulled cash out of checking and savings accounts to buy T-Bills for the yield since T-Bills are higher than checking account yields and we will continue to ladder until we believe the Fed may be done hiking at which point we may buy longer dated Treasurys for our portfolio.
We’ll keep you posted but in the meantime stay tuned and stay solvent…