Broker Check

Mosaic Asset Partners - The Fed Holds The Party Line

March 22, 2024

At the conclusion of the Federal Reserve’s two-day meeting this past week, all eyes and ears were intently focused on what Chairman Powell’s post meeting storyline would be. We got exactly what was expected. Following its two-day policy meeting, the central bank’s rate-setting Federal Open Market Committee said it will keep its benchmark overnight borrowing rate in a range between 5.25%-5.5%. Along with the decision, Fed officials penciled in three quarter-percentage point cuts by the end of 2024, which would be the first reductions since the early days of the Covid pandemic in March 2020. “We believe that our policy rate is likely at its peak for this type of cycle, and that if the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year,” Powell said at his post-meeting news conference. “We are prepared to maintain the current target range for the federal funds rate for longer if appropriate.” When I read this line post meeting, I could have sworn he used nearly the exact same language in his last major post meeting comments. I keep saying this, but no news is good news in this environment. Our markets responded positively to the perceived lack of action right now and the belief that we are on the right track for that smooth landing we all have been hoping for.

Another interesting note made from the Fed’s recent meeting was that they raised their forecast for GDP growth this year. They now see the economy running at a 2.1% annualized rate, up from the 1.4% estimate in December. The Fed also tweaked some of the other projections for 2024 including the unemployment rate to 4% (lower) and personal consumption expenditures (PCE) to 2.6% (higher). Changes to these metrics are indicative of the recent trends we have seen of better-than-expected employment data and stickier-than-expected inflation readings.

So, what should we expect in the near-term? With base interest rates remaining stable since last July a few things should be expected. Interest rates on credit cards are likely to remain elevated for the balance of the year. Interest rates in high-yield savings accounts and CDs should stay higher but not for much longer. Once the Fed truly pivots and begins a lowering rate process, these will be some of the first things to move lower. Mortgage interest rates will also remain elevated but should begin moderating as well once rates start to ease. As of this past Wednesday, the average rate for U.S. savings accounts was still a paltry .58%! We have discussed this before but make sure you are exploring “high yield” savings opportunities when you can. There are still several institutions out there offering 5%+ for these types of savings accounts. While they are likely to not remain that way for much longer there is still the opportunity to earn better than 0.58%. Let us know if we can help!

Finally, a traditional right of spring passage for many is the annual March Madness college basketball tournaments for the men and women. I came across an article titled “March Madness could cost employers $17B in productivity” (link below). Now, I can’t say I am a diehard college hoops viewer, but I do find enjoyment is seeing these young men and women playing out their dreams through their love of the game. I mean what’s better than a Cinderella story??!! While the costs to productivity may be a short-term headache I like to think of the team bonding that can be found in these simple and impactful fun filled days. “The average worker will spend 7 hours watching college hoops during its duration, with 26 percent of Americans saying they’re prepared to skip work altogether in order to watch. And if employers want to keep workers happy while they are working - they should lean into the madness. Seventy-eight percent of employees said celebrating the tournament at work helps to boost morale - and 39 percent said they became closer with a coworker after participating in an office pool.” Yes, this all might seem a bit silly when you think about it, but honestly can’t we all use a bit of levity right now? Who’s up for a good game of horse!

Have a nice weekend!

https://www.cnbc.com/2024/03/20/how-interest-rates-have-changed-even-as-the-fed-holds-steady.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail

https://www.cnbc.com/2024/03/20/fed-meeting-march-2024-.html?__source=iosappshare%7Ccom.apple.UIKit.activity.Mail

https://www.thestreet.com/video/march-madness-could-cost-employers-17-billion-in-productivity

Christopher E. Wasson, CFP®

President

Mosaic Asset Partners, LLC

1122 Kenilworth Drive, Suite 310

Towson, MD  21204

410.821.0089         fax 410.821.5993

MosaicAssetPartners.com  

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Mosaic Asset Partners, LLC is not affiliated with Kestra IS or Kestra AS.  Investor Disclosures: https://www.kestrafinancial.com/disclosures

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.