Fed Raises Rates by 0.25%

[Matt]

It finally happened.. and the immediate reaction to the market seems to show that the world did not, in fact, end.

Full Release

Interest rates raising should impact the price of bonds, but this is not just an issue of duration, but also how much has already been baked into the funds. For example, two Bond funds that I invest in:

MUB (AMT friendly Muni ETF) and VCIT (intermediate term US bond ETF) shown against the Dow Jones Industrial average.



You can see the bottom two Bond funds have barely moved on the news, and indeed, may end the day higher, as investors realize the world hasn't ended, and they can invest in bonds.

 

[dhermsen]

It usually takes a couple of weeks for banks to adjust rates on investments correct?

 

[Matt]

It usually takes a couple of weeks for banks to adjust rates on investments correct?

The consensus seems to be that we won't see a lot of changes to things like savings accounts rates any time soon.

 

[sriki]

How are the housing loan's interest rates affected by this?

 

[dhermsen]

Adjustable rates should go up at some point. If you have one, I would like into moving it to a fixed rate.