As expected, the Fed announces rate increase. The Federal Reserve announced a quarter-percentage-point increase in interest rate increase at 2 pm today, citing a strong labor market and economy.
The Fed raised the benchmark borrowing rate to a range of 2 percent to 2.25 percent, the third hike this year.
Immediately after the announcement, Gold dropped 5 dollars but has recovered somewhat since then.
Also announced was that another rate hike in December is expected, and at least 3 more next year.
The question now is, at what point will the consumer start to feel the pain of higher interest rates?
The real story is, and was, that everyone got real comfortable over a number of years enjoying cheap money.
Now that wages are increasing, the stock market is making new highs and, according to the Atlanta Fed, we are growing at a rate of 4.2 percent, the Fed has no choice but to stay the course and be aggressive.
Some economists I speak with believe they are not being aggressive enough. True they had a low starting point, but when the equity markets continue to shrug off higher interest rates, some claim things are not just matching up.
Tariffs and higher interest rates should put the brakes on the equity markets, but investors seem not to care.
I don’t know what it will take to get the price of Gold in rally mode, but with a stock market seemingly making new highs every day and more rate hikes to come something has to give. Will it be the fallout from the midterm elections or just someone in Washington waking up and realizing that government spending is out of control? And let’s not forget our debt issue, that needs to be addressed immediately.
Believe it or not, someday this party will end and many traders and economists I speak to, say it will be sooner rather than later.
I’m all ears if someone can tell me when.
Enjoy the rest of your day.
Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals for information and thought-provoking purposes only and does not purport to predict or forecast actual results. This editorial opinion is not to be construed as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein cannot be attributable to Dillon Gage. Reasonable people may disagree about the events discussed or opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. It is not a solicitation or advice to make any exchange in commodities, securities or other financial instruments. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisers with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.