Yesterday, the Federal Open Market Committee (FOMC) left interest rates unchanged, which was widely expected, but more importantly, they dialed down their expectations for future rate hikes. FOMC members now see the Fed Funds rate remaining below 3% until 2019, which is well below the historical long-term average of 5.5%. Long-term interest rates have remained below 3% for over 8 years now, with the 10 year treasury hitting a record-low of 1.36% in early July. The statement by the FOMC yesterday confirms that yields are set to remain lower for longer, which makes finding steady yet reliable income hard to come by. Yet there are asset classes, such as preferred securities, that still offer relatively high yields without equity-like volatility.
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