The Federal Reserve, as widely anticipated, raised short-term interest rates .25% on Wednesday at its first policy-setting meeting after the U.S. presidential election. This was its sole increase this year and only the second in 10 years. Improved economic conditions, namely a strengthened labor market, helped cement the central bank’s decision. The Federal Reserve Board pointed to the latest jobs report showing the unemployment rate dropping from 4.9% to 4.6%, its lowest level since August 2007, as one of the motivating factors for the increase.

In addition to the Fed increasing rates, U.S. Treasury yields have been on an upward trajectory since November. For example, the 10-year Treasury has reached as high as 2.49%, both in anticipation of the Fed's move and on expectations that U.S. President-elect Donald Trump will embark on an array of economic stimulus measures when he takes office in January. If his administration's initiatives, outlined to include lower taxes and incentivize $1 trillion in infrastructure spending, are successful, Fed Chair Janet Yellen is open to three potential increases in 2017. Commercial lenders have already recently raised interest rates, so we do not anticipate an immediate negative impact on interest rate pricing. A healthy economy leading into 2017 leads us to expect the capital markets to remain strong in 2017, which will enable investors continued access to attractive and reliable financing.