FOMC Meeting Minutes
Also yesterday afternoon was the release of the minutes from the May 3rd/4th FOMC meeting. They didn’t reveal any major surprises, but did confirm that the Fed is highly likely to move key short-term interest rates higher by .500 of a point at each of the next two FOMC meetings (June 14-15 and July 26-27). Those moves were expected by many analysts to help get inflation under control, which is running at its strongest level in 40 years. Rising inflation erodes the value of a bond’s future fixed interest payments, making them less appealing to investors. This is why bond yields and mortgage rates move higher when headlines show signs of stronger inflation. However, since these minutes told us something that traders already assumed, we saw almost no reaction to their 2:00 PM release yesterday.