INCREASING INTEREST – 5/23/22

Rates are up significantly since 1/1/22 because the Fed has made clear it will raise rates substantially over the next 6-12 months. Another reason is because the Fed will be substantially reducing the amount of bonds and mortgage-backed securities it holds. While we know reasonably well how rate hikes impact the economy, amazingly, economists really don’t know how reducing the balance sheet will impact rates, and thus the economy. (Source: Dr. Elliot Eisenberg, the Bowtie Economist).

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