January 5, 2023

At its December 2022 meeting, the Federal Reserve’s FOMC announced it was raising the Fed Funds Rate by 25 bps to 4.5%. This was the latest in a series of rate hikes that began in March 2022.

The Fed’s statement can be found here.

This chart offers a longer-term perspective on the Fed Funds rate, which are now at their highest level since November 2007.

Following its December meeting, the Fed release this latest “dot plot” of where FOMC members expect the Fed Funds rate to move in the future. The median expectation is for rates to rise another 75 bps in the coming year, before starting to pull back.

As of January 3, the yield on 10-Year Treasuries is at 3.79%, up from 1.52% at the end of 2021.

The spread between 10-year and 2-year Treasury yields remains negative. A negative “yield curve” is often seen as a leading recession indicator.

As of January 3, the spread on high-yield bonds stands at 4.7%, up from 3.1% at the end of 2021, but historically fairly moderate. The spread is often seen to reflect perceived credit risk in the economy.

As of January 3, the U.S. 30-Year Fixed Mortgage Rate stands at 6.42%, down from a recent peak of 7.08% in October. Mortgage rates have risen sharply from 3.11% at the end of 2021, driven by Fed rate hikes.