Santa’s Revving Up His Sled; What’s Next? Watch the Fed and Bonds!

As we enter into the last few weeks of the year, it’s time to start wondering what’s next for the markets. After a tumultuous year filled with unknowns, it may be time to start looking at the Federal Reserve (Fed) and the bond market. The Fed has already taken major steps throughout 2020 to help stabilize the US economy, and there may be more to come. With Congress yet to pass a much-needed stimulus package, the Fed has purchased billions of dollars in Treasury bonds and mortgage-backed securities throughout the year. This has provided a much-needed cushion to the markets, and kept interest rates low in an effort to stimulate borrowing and investment. Meanwhile, it’s no secret that the bond market has been hit hard by the pandemic. With interest rates near all-time lows, and yields lower than ever, investor sentiment has shifted significantly. Many investors have been scrambling to find yield in a very uncertain environment, which has led to a steep decline in prices. So, what should you watch out for in the next few weeks? As the US enters a new year, it’s likely that the Fed will continue its accommodative monetary policy, and could even increase its bond purchases if needed. It’s also important to remember that bond yields have been fluctuating wildly, so keep an eye out for any changes in those as well. Finally, it’s also worth watching the housing market. Homeownership remains a key component of the US economy, and any changes in the mortgage market could lead to wider-reaching implications. The housing market has been struggling, with record-low inventory levels, and rising home prices. The Fed’s move to lower interest rates has been a welcomed one, and it will be interesting to see if that continues well into 2021. There’s no doubt that Santa may be getting his sled ready, but it’s also time to focus on the Fed and the bond market heading into 2021. While there is still much uncertainty in the markets, the Fed’s continued support is sure to bring some respite, and the recent moves in the housing market are also encouraging. So, if you’re looking for clues to the coming weeks and months, these are certainly places to start. As we enter into the last few weeks of the year, it’s time to start wondering what’s next for the markets. After a tumultuous year filled with unknowns, it may be time to start looking at the Federal Reserve (Fed) and the bond market. The Fed has already taken major steps throughout 2020 to help stabilize the US economy, and there may be more to come. With Congress yet to pass a much-needed stimulus package, the Fed has purchased billions of dollars in Treasury bonds and mortgage-backed securities throughout the year. This has provided a much-needed cushion to the markets, and kept interest rates low in an effort to stimulate borrowing and investment. Meanwhile, it’s no secret that the bond market has been hit hard by the pandemic. With interest rates near all-time lows, and yields lower than ever, investor sentiment has shifted significantly. Many investors have been scrambling to find yield in a very uncertain environment, which has led to a steep decline in prices. So, what should you watch out for in the next few weeks? As the US enters a new year, it’s likely that the Fed will continue its accommodative monetary policy, and could even increase its bond purchases if needed. It’s also important to remember that bond yields have been fluctuating wildly, so keep an eye out for any changes in those as well. Finally, it’s also worth watching the housing market. Homeownership remains a key component of the US economy, and any changes in the mortgage market could lead to wider-reaching implications. The housing market has been struggling, with record-low inventory levels, and rising home prices. The Fed’s move to lower interest rates has been a welcomed one, and it will be interesting to see if that continues well into 2021. There’s no doubt that Santa may be getting his sled ready, but it’s also time to focus on the Fed and the bond market heading into 2021. While there is still much uncertainty in the markets, the Fed’s continued support is sure to bring some respite, and the recent moves in the housing market are also encouraging. So, if you’re looking for clues to the coming weeks and months, these are certainly places to start.