On Thursday, March 21, the stock market celebrated the Federal Reserve’s Federal Open Market Committee (FOMC for short, but let’s just say “the Fed” to make it simple) decision to not just leave interest rates alone at that meeting, but to say it would leave rates alone for the year. On Friday, March 22, the stock market suffered a hangover after realizing it was possibly celebrating the wrong things.
Let’s talk about what this will mean for your investment portfolio. For bonds, generally, you just got a gift. All other things equal, when interest rates go down, bond prices go up. The capital you have saved in bonds just became better protected. For equities, it’s a bit more complicated.