CPI vs Fed Funds Rate vs 10-Yr US Treasury Note Rate Graph

 Graph shows January 2004 through March28, 2025

Graph shows July 2020 through March28, 2025:

Kirk Lindstrom's Investment Letter

To see what stocks and ETFs are in my "Explore Portfolio" and get a full list of on my price targets to both take profits or buy more:

 Subscribe NOW and get
the March 2025 Issue for FREE!!! 
(If you mention this ad)

Stock Market vs. US Fed Funds Rate 1993 to 2024

US Stock Markets (Log Scale) vs. Fed Funds Rate and some other charts I use to help find good times to take profits then use those profits to buy back shares when the markets decline.

STAX Schwab Trading Activity Index Over Time - January 2019 through Today

II Sentiment: Investors Intelligence Bulls / (Bulls+Bears) & S&P 500 Weekly

DJIA vs Oscillators

The Federal Reserve lowered interest rates by 0.50% and their preferred measure of inflation, PCE, came in at 2.2% (but 2.7% if you ignore food and energy inflation.)

Many are excited by this news thinking the Fed has inflation heading back to 2.0%, but... note that core inflation is not dropping and has actually risen to its May 2024 level after being lower in June and July.

Kirk Lindstrom's Investment Letter

To see what stocks and ETFs are in my "Explore Portfolio" and get a full list of on my price targets to both take profits or buy more:

 Subscribe NOW and get
the September 2024 Issue for FREE!!! 
(If you mention this ad)

Fed Funds Interest Rate vs S&P 500 Charts

 Fed Funds Interest Rate vs S&P 500 for 10/15/23

More Treasury Interest Rates

Kirk Lindstrom's Investment Letter

To see what stocks and ETFs are in my "Explore Portfolio" and get a full list of on my price targets to both take profits or buy more:

Subscribe NOW and get
the October 2023 Issue for FREE!!! 
(If you mention this blog post)

Kirk's Key Articles:

• Using Asset Allocation to make money in a Flat Market
• Winning On The Zigs, Losing On The Zags
• Current Rates for New & Older US Series I Bonds

Fed Funds Rate vs US Stock Market Indexes - Historical Charts

This chart shows the US Federal Funds Rate vs. the US stock market index values from 1993 through today.  The next three charts show the Dow, S&P 500, Nasdaq and Russell 2000 indexes over the same period.  The final chart shows US Treasury interest rates from 1994 through today.

US Stock Markets (Log Scale) vs. Fed Funds Rate 

DJIA chart showing Irrational Exuberance & Pessimism on a log scale

S&P 500 Intraday Prices - Log Scale

Nasdaq Composite - Intraday log chart

 US Treasury interest rates

Kirk Lindstrom's Investment Letter

 Subscribe NOW  and get
the May 2022 Issue for FREE!!!

More Articles by Kirk Lindstrom:

• Using Asset Allocation to make money in a Flat Market
• Inflation Hot at 8.3% but Monthly Readings Much Lower with Energy Falling
• May Jobs Report Shows Fewest New Private Sector Jobs in a Year

end

Kirk's Interest Rate Charts for May 7, 2022

Interest Rate update for Friday May 6, 2022.  Currently the Nasdaq and Russell 2000 small cap indexes are in bear markets (down over 20% from their highs) while the Dow and S&P 500 indexes are in major, double digit corrections off their highs. Meanwhile, The 10-year US Treasury bond has more than doubled this year to 3.12%

US Treasury Interest Rates Graph

Market Update Closing Values

Mortgage Rates: 

I'm so old I remember when I had a VARIABLE loan at 14.0% a year to buy my first home, a townhouse in Sunnyvale CA!  I was sure jealous of my parents who had a CAL-VET loan at fixed at 4.0%.  With that memory, rather than using cash to pay off my home loan early, I locked in a fixed rate mortgage at 3.375 % and put the cash in TIPS and I-Bonds.  Some of my  iBonds have base rates of 3.0% and will pay 10.23% for the next six months! 

• Current Rates for New & Older I Bonds
  
  
• Historical Series I Bond Rates

CPI vs Fed Funds Rate vs Expected 10-Yr Inflation

A rising Fed Funds Rate was not bad news for the stock market coming out of the Great Recession and the telecom/internet bubble collapses:

US Fed Funds Rate vs. S&P 500   

TIPS Core Yield vs S&P 500
More about TIPS including when to buy them is covered in my newsletter. 

Can the Fed engineer the elusive "soft landing" to tame inflation currently running at 8.5% without pushing the US economy into another recession?  

How do you invest in such difficult times?

First off, I'd start with people who have been recommending TIPS and I-Bonds in their newsletters as I have... start by reading:

• Current Rates for New & Older I Bonds

Then subscribe to:

Kirk Lindstrom's Investment Letter Service

• Subscribe NOW and get the May 2022 Issue for FREE!!!
         (Free only If you mention this blog post)
  
  
• More Information 

Fed Raises Rates - Removes "Accommodative" from Policy Language

Today the US Federal Reserve Open Market Committee (FOMC) raised their Fed funds interest rate by 0.25% to a new range of 2.00% to 2.25%. As my chart below shows, this new rate is still low by historical standards.

The Fed will also increase its balance sheet reduction (reverse QE) by another $12 billion per month:

The Committee directs the Desk to continue rolling over at auction the amount of principal payments from the Federal Reserve's holdings of Treasury securities maturing during September that exceeds $24 billion, and to continue reinvesting in agency mortgage-backed securities the amount of principal payments from the Federal Reserve's holdings of agency debt and agency mortgage-backed securities received during September that exceeds $16 billion. Effective in October, the Committee directs the Desk to roll over at auction the amount of principal payments from the Federal Reserve's holdings of Treasury securities maturing during each calendar month that exceeds $30 billion, and to reinvest in agency mortgage-backed securities the amount of principal payments from the Federal Reserve's holdings of agency debt and agency mortgage-backed securities received during each calendar month that exceeds $20 billion. Small deviations from these amounts for operational reasons are acceptable.

The US Stock markets liked the move because it signals that the economy is still strong.

Had the FOMC not raised rates, perhaps under political pressure from President Trump who likes low rates to stimulate GDP growth, the markets could have take in as a sign of weakness in the US economy.

Kirk Lindstrom's Investment Letter

 Subscribe NOW  and get
the September 2018 Issue for FREE!!!

The FOMC also increased their estimate for GDP growth for 2018 and 2019 since the last meeting.

More information:

• Federal Reserve Press Release (PDF)
• Policy Statement
• Economic Projections (pdf)
• Meeting calendars, statements, and minutes (2013-2018)

US Fed Funds Rate vs. 11th District Cost of Funds Index (COFI)

This graph shows the US Federal Reserve Funds Rate  plotted vs. the 11th District Cost of Funds Index (COFI).  COFI is an important index for setting interest rates for home purchases and refinancing.

From the Federal Home Loan Bank of San Francisco:

"The 11th District Monthly Weighted Average Cost of Funds Index (COFI) is one of many indices used by mortgage lenders to adjust the interest rate on adjustable rate mortgages. The COFI is computed from the actual interest expenses reported for a given month by the Arizona, California, and Nevada savings institution members of the Federal Home Loan Bank of San Francisco (Bank) that satisfy the Bank's criteria for inclusion in the COFI (COFI Reporting Members).
In addition to the COFI, the Bank publishes semiannual weighted average cost of funds indices for California and the 11th District, which are based on the interest expenses of applicable COFI Reporting Members from January through June and July through December each year."

Web page snapshot for 7/14/17:

Kirk Lindstrom's Investment Letter Service:

• Subscribe to my newsletter service NOW and get the July 2017 Issue for FREE! !   Your 1 year, 12 issue subscription will start with next month's issue.
• Get email alerts when I buy or sell securities for my explore portfolio
• "Auto Buy" and "Auto Sell" levels set ahead of time for target buy and sell levels for my securities.  This allows you to place "limit orders" with your broker in advance so you can go about your business.
• All questions about what I write answered by Email.  If what I write is not clear to you, just ask!