Here's What To Expect In 2017

George Yacik - Contributor - Fed & Interest Rates

It’s more or less obligatory at this time of year for financial columnists and bloggers to present their predictions for the coming year. Not wanting to be left out, here are mine, for what they’re worth:

Interest rates will moderate and rise gradually – repeat, gradually – throughout the year, not spiking sharply as they did in the second half of 2016. The yield on the 10-year Treasury note, now at about 2.50%, will end 2017 at about 3.0%, although it may rise as high as 3.5% sometime during the year before settling back down again.

U.S. stocks will rise about 5% for the year. Sorry, folks, the easy money was already made in 2016. But that’s better than long-term bonds, which will either lose money or just about break even (see the previous paragraph).

The Federal Reserve will now put into action the policy it promised back at the end of 2015, namely raising short-term interest rates 25 basis points per quarter – not three as it indicated in its December post-meeting announcement. The Fed will be far less restrained in making monetary policy decisions in 2017. No more erring on the side of caution under Trump... Continue reading "Here's What To Expect In 2017"