Did you get a load of the shocking moves in the interest rate markets this week? On Wednesday alone …
==> March 2016 Eurodollar futures prices plunged more than 24 basis points to 98.52. That was the worstone-day decline since last summer. Just look at this chart and you’ll see what I mean.
Eurodollar futures track market expectations about the future level of short-term rates. Plunging prices signal that investors are radically re-pricing both the magnitude and timing of future short-term rate hikes. They’re clearly coming around to the view I have been stressing repeatedly: The Fed will be forced to raise rates sooner, and by a larger magnitude, than anyone thought a few short quarters ago.
==> Five-year Treasury yields also exploded, surging 15 basis points to 1.7 percent. That was also the biggest one-day leap since last June.
==> Longer-term yields rose a bit more slowly. But they still climbed noticeably, with the yield on the 30-year Treasury rising to 3.68 percent from a recent low of around 3.54 percent.
The catalyst for those upsurges was the latest Federal Reserve policy meeting. Fed policymakers slashed yet another $10 billion off the QE money-printing program. That was the third such reduction in a row, and it leaves QE at just $55 billion per month. They also came out and endorsed the view that the economy is still recovering and that the labor market is continuing to improve.
Specifically, they said that labor “market indicators were mixed but on balance showed further improvement.” And: “The Committee currently judges that there is sufficient underlying strength in the broader economy to support ongoing improvement in labor market conditions.”
In the post-meeting press conference, new Fed Chairman Janet Yellen also said that QE likely will be dead and buried by this fall. And she suggested rate hikes could follow a few short months thereafter.
If you’ve been reading my frequent interest rate updates in Money and Markets, none of this should come as a surprise. This is exactly the process I’ve been expecting, and it’s going to create both massive winners and losers across the market landscape.
Select investments will soar. Others will get crushed. The trick is knowing which are which — and getting on board with them before the greatest interest rate bull market in more than 37 years gains even more steam.
That’s why I just created a landmark, comprehensive special educational course called “How to Profit from Changing Interest Rates.”
This is unlike anything we’ve ever done at Weiss. My course is designed to teach you all about the ins and outs of the interest rate markets — and how to put them to work for you. Not just in your core investment portfolio, but in your personal finances, your real estate, your speculative holdings, and more.
The timing couldn’t be more crucial, in light of the massive shifts the Fed signaled as recently as Wednesday. And that’s why I’m making the first session of this seven-part course available to you, free of charge.
To watch session #1 and learn how to gain access to the remaining sessions, all you have to do is click here for more details. Or call my customer service staff at 1-800-291-8545 and they’ll get you hooked up right away.
Then please do stay tuned. I will have many more updates for you as this titanic shift in the interest rate markets gathers steam.
Until next time,