So we’re cutting rates now?... Wednesday, America's central bank set the stage to reduce interest rates nationwide later this summer. It’s a sign those wise government bankers are concerned the trade war could hurt the economy, so they’re saying “we got your back” — Lower rates would support borrowing, potentially offsetting trade war pain. The Fed hasn’t cut interest rates yet, but markets are acting like they have...
- Mortgage rates: A 30-year house loan had a 5% average interest rate in November. Now it’s down to 3.86%, close to record low levels.
- 10-Year US government bonds: The interest the government pays for 10-year loans dropped below 2% yesterday for the first time since 2016.
We're talking supremely unsexy industries... Electric utilities, packaged goods, wireless — lower rates could change that. NextEra Energy, Procter & Gamble, and Verizon don't have the cachet of self-driving meal kits startups these days. But they all boast profitable track records and hook up shareholders with cash dividends every quarter. Most fast-growing companies don't pay dividends at all.
Everything’s relative... The dividends of these companies haven’t changed much since December. But interest rates overall have. With lower rates today compared to December, these dividends look good to investors that just want reliable cash payments. That's why the Fed's words Wednesday are bringing sexy back.