This week brought long-awaited although not unexpected news from the US Federal Reserve Board: Fed officials expect to raise interest rates from the current level of “near zero” by the end of 2023 instead of sometime in 2024. Earth-shattering? NO. Cause for paying attention? YES. Even though 2023 seems fairly distant, interest rates have already begun to increase. It is not too early to pay attention to, review, and understand your overall Asset Allocation. Thus, today’s title, “CYA”. Cover Your Asset Allocation.
As quick background, the US Federal Reserve System, or the “Fed”, has as its mandate to maximize US employment and allow for stable prices. Its primary tool for accomplishing these goals is the setting of short-term interest rates – which then translate into to interest rates for anything from 30-day Treasury bills to 10-year Treasury notes, to 15- and 30-year mortgages. Even debt issued globally watches the Fed’s interest rate policy.
