Wednesday, December 14, 2016

FOMC Rate Decision - Where's The Big Money Going

With the FOMC Rate Hike Decision coming out at 2pm EST it's just about guaranteed that a hike is inline.  The market has been anticipating this hike for months, and quite frankly the Fed has come out and basically said it's happening. If they do surprise us and don't hike then we can all but be sure the next meeting will feature one.

So where has the big money been going and how can we play this?

Here is a look at the recent performance of US Treasury ETF's with their maturity duration in parantheses. Short term debt is barely being sold as it's off 0.37%. Meanwhile longer dated debt has seen the brunt of selling as it's off by 10.68% since July.

SHY(1-3 years)

IEF (7-10 years)

TLT (20+ years)

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Meanwhile the IShares short treasury debt ETF (SHV) is up .12% since July. It's not a big move, but the ETF could function as a hedge in your portfolio.

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Corporate debt is showing the same general trends along the yield curve. It seems at this point it would be prudent to analyze your debt holdings to see if your comfortable with your bond holdings. Also the composition of your bond holdings should also be reviewed. If you are heavy in government versus corporate debt now would be a good time to rebalance.

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