May 9, 2023

At its May 2023 meeting, the Federal Reserve’s FOMC announced it was raising the Fed Funds Rate by 25 bps to a range between 5.00% and 5.25%. This was widely expected to be the last 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 August 2007.

Following its March meeting, the Fed released this latest “dot plot” (published quarterly) of where FOMC members expect the Fed Funds rate to move in the future. The median expectation was for one more 25 bps rate hike (which happened in May), before starting to pull back.

As of May 5, the yield on 10-Year Treasuries is at 3.44%, down from 3.88% at the end of 2022.

The spread between 10-year and 2-year Treasury yields remains negative, since July 2022. A negative “yield curve” is often seen as a leading recession indicator.

The U.S. Treasury yield curve (currently inverted, as of May 9), compared to one year ago and two years ago, when it was upward-sloping.

As of May 8, the spread on high-yield bonds stands at 4.47%, down from 4.81% at the end of 2022, despite a recent modest spike. The spread is often seen to reflect perceived credit risk in the economy.

As of May 4, the U.S. 30-Year Fixed Mortgage Rate stands at 6.39%, 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.