Chart Of the Day

Today, the Federal Reserve raised the fed funds rate from 2% to 2.25%. Today's chart provides some perspective to the current interest rate environment and how it relates to the stock market. The bottom chart illustrates that while the fed funds rate has been rising as of late, it still remains well within a long-term downtrend. The top chart illustrates how the market performed following significant tops and troughs in the fed funds rate. For example, the stock market's performance has been less than stellar following major troughs in the fed funds rate (see red arrows). There is logic to this relationship since rising rates increase both the cost of debt and the relative attractiveness of interest bearing investments 

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