Markets broke the recent winning streak today, as all indexes ended in the red. We are still close to our annual high, though, as investors watch the Federal Reserve for signs of a pullback. Economists are betting on continued tapering. That means higher interest rates, but will these filter down to the short-term portion of the yield curve?
Housing has already lost a little steam because of the spike in long-term rates. I'm noticing yields on money markets creeping (and I DO mean creeping) higher. Could there be relief in sight for CD investors?
The good news for retirees on fixed incomes will be bad news for business, though. So far, the economic news has been JUST good enough to fuel gains in the market but not SO good that our friends at the Fed are tempted to put the brakes on a good time.
Whoever follows Mr. Bernanke (I'm a Yellen fan myself) will be under pressure the keep the easy money party going. Not only does the U.S. economy depend on this, but economies around the globe benefit from this policy.
Sooner or later, though, it will come to an end. Let's hope for a long, slow transition!