So what will the Fed do now about interest rates?

So what will the Fed do now about interest rates?

Once upon a time, before the U.S. stock market moved into an actual correction and before bond yields spiked, the Federal Reserve was clearly on track to raise short-term interest rates at its March 21 meeting. The debate in the financial markets was about whether the Fed would increase its benchmark interest rate three or four times in 2018. But then we got tax cuts piled on top of spending increases.

The financial markets are in shock at Washington’s debt plans

The financial markets are in shock at Washington’s debt plans

Notice that the signing of a bill early this morning to keep the government open and to fund operations for two years hasn’t resulted in a serious rally in either stocks or bonds. And mind you, this deal also “solves” the debt ceiling crisis by suspending the debt ceiling until March 2019. That passes for statesman-like foresight in Washington these days and this certainly counts as good news. So why no big upside move on these events?

Trick or trend: How the tax bill might move financial markets next week

Trick or trend: How the tax bill might move financial markets next week

We certainly won’t know what’s actually in the tax bill when the House of Representatives begins markup of the legislation on Monday. It’s not even clear if members of the House will know what’s in the bill. And there’s no chance that the bill as written in the House will be the bill that comes up for a vote in the Senate. But, to be cynical and I think realistic, none of this matters as far as the financial markets are concerned. For stocks and bonds this is a binary decision: Either the tax bill passes with the cut in corporate rates from 35% to 20% intact. Or the bill doesn’t pass.Â