Are Interest Rates Really On Hold?

by | Apr 29, 2012 | Asset Management, Videos


The Federal Reserve has announced they are “on-hold” through next year, and likely well into 2014. What kind of effect will that have on the stock market? Does that mean interest rates will stay low that entire time?
Maybe not.

The “bond market” will actually do a “daily” job of setting interest rates. The bond market helps to balance the supply and demand of buyers and sellers of bonds and all things fixed income. But, like stocks, anything with a number can be plotted on a point and figure chart. The patterns that emerge really tell a different story about interest rates.

Remember, when interest rates rise, the VALUE (price) of your existing bonds FALL in the market.
When rates (yields) FALL, the value of your bonds RISE.
There is a direct inverse relationship between interest rates and bond yields. If one side goes up, the other side goes down, much like a see-saw.

Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment or investment strategy will be profitable or equal to past performance levels.

All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions, or withdrawals may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for an investor’s portfolio.

If you are relying on a blog post for specific investment advice, you are making a huge mistake. Please speak with an investment adviser before making ANY investment decisions.
If you do not have an investment adviser, we encourage you to contact Mullooly Asset Management at 732-223-9000, or through our website. Under no circumstances should the content discussed here to be considered specific investment advice.

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