rates will likely move lower?

Last week rates improved slightly as money flowed from stocks to bonds. This week is loaded with economic reports and also features the Fed's FOMC meeting. So will rates continue to improve or begin heading higher again?

The price of crude oil continues to wreak havoc in the financial markets and even OPEC seems worried. Last week, Saudi Arabia announced that they will increase oil production in the near future, to a record high. They are concerned that the high price of crude oil will lead to lower demand and a turn toward alternative energy sources.

This week will likely be driven by the Fed's statement immediately following their two day meeting on Wednesday. Most economists believe the the Fed will hold the course and leave rates unchanged. However, any indication in their statement that they would be willing to increase rates in the future would likely cause rates to tumble.

Remember, when the Fed raises rates it causes downward pressure on inflation, which in general is good for rates.

The bottom line: If the Fed hints at rate hikes in their statement expect rates to move lower, but if they don't rates will likely move higher.