The Federal Reserve is on course to increase short term interest rates at their March meeting following a strong jobs report this morning. The rate increase would signal greater confidence in the global economy and would give Fed officials a chance to spread out further increases throughout the year. The economy created 235,000 new jobs in February, surpassing expectations, and the jobless rate dropped to 4.7%. This report makes a .25% rate hike at the conclusion of the Feds 2 day meeting next week a virtual slam dunk. The first increase in short term rates since the recession was December 2015. It took another year before the Fed was able to increase rates again. It’s expected the Fed will increase rates at least 3 times throughout 2017.
The 30 Year fixed rate has risen nearly .75% following the Presidential election. Funds have flowed from the Bond market into the stock market as investors view a Trump administration as positive for the economy with potential cuts in the tax rate and additional spending on the US infrastructure. Consumer confidence is also on the rise as more jobs are created and wages are being increased. This bodes well for the housing market going forward.