The short-term Fed Funds Rate rose from zero percent in March 2022 to a midpoint of 5.375% in August 2023. The rate on a 30-Year fixed-rate mortgage that was under 3% in late 2021 is now over 7.50%. While the recent consumer and producer price index data shows that inflation has declined, rates keep climbing. A perfect storm of central bank liquidity, government stimulus, and pandemic-inspired supply chain bottlenecks caused inflation to rise to the highest level in decades. Meanwhile, the latest comments from the Fed’s annual Jackson Hole, Wyoming, gathering showed the U.S. central bank remains committed to returning inflation to its 2% target level. Even with the recent declines, the economic condition is sitting at over double that level, meaning one or two more 25-basis point rate hikes could be on the horizon. The iShares 20+ Year U.S. Treasury Bond ETF (TLT) remains in a bearish trend.
TLT has plunged from the March 2020 high
