Podcast: An Expected 2.375% Fed Funds Rate and Two Other Numbers You Need to Know

Numbers By Barron’s is a two-minute financial podcast with three vital numbers to start your morning. Available on iTunes, Stitcher, and wherever you get your podcasts-as well as on your Amazon Alexa smart speaker

Three numbers to start your day:

-after the Federal Reserve’s decision today.

Market prices show that investors think the Fed will raise interest rates.

After three increases earlier this year, cash already gives investors a decent return. The yield on a three-year Treasury note is almost 2.7%.

The flipside is that investors are retreating from other markets, which is why there has been so much volatility.

And it’s what President Donald Trump was referring to when he tweeted that the Fed should “Stop with the 50 B’s.”

To explain, we need to go back to the financial crisis. The Fed bought more than 4 trillion dollars of bonds to prop up markets and the economy. When those bonds matured, it reinvested the principal.

Now the Fed wants to get its balance sheet back to normal. So it is cutting down on reinvestments-and shrinking its bond portfolio.

In other words, the central bank is tightening policy, even when it’s not raising rates.

-according to Bank of America Merrill Lynch.

Debt reduction was the most popular option, followed by capital spending and then paying cash to shareholders.

That’s a big change from the past few years, when companies that paid shareholders got rewarded with rallies in their shares.

It also shows just how worried investors got about corporate debt last month.

Numbers by Barron’s is a new daily podcast. Find out more here.

This episode was hosted by Alexandra Scaggs.

Write to Alexandra Scaggs at alexandra.scaggs@barrons.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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