U.S. bonds had a tough week with the 10-year U.S. treasury trading up to 2.18% after the Federal Open Market Committee (FOMC) comments on Wednesday.
Commentary from FOMC did not rule out a rate hike this December. In its policy statement, the FOMC reiterated its dual mandate of full employment and 2% percent inflation as a continued theme in the decision to raise short term interest rates. The comments suggested that continued modest increases in employment could tip the Fed to raise rates. No one knows for sure, but trading suggested a stronger bias toward a December 2015 rate hike after the FOMC comments were released.
While U.S. policy makers continue to discuss rate hikes the rest of the world continues to ponder how to use monetary tools to stimulate their economies. How this will play out is anyone’s guess.
With so many diverging policy making decisions being presented on a global scale, we are watching the market closely and are very cautiously floating interest rates at this time.