Yesterday, the Federal Reserve raised interest rates for the first time in more than three years, and stocks turned lower following the decision — leaving the TSP’s C and S Funds down roughly a third to half a percent on the day.
The Federal Open Market Committee (FOMC) voted unanimously to raise the target range for the federal funds rate by 25 basis points, to 3.75%–4.00%. The Fed said inflation remains elevated and that the move was intended to support a more timely return to its 2% inflation goal.
The bigger issue for markets may be what comes next. The Fed’s own quarterly projections point the same direction: 16 of the 18 policymakers who submitted forecasts see at least one more quarter-point hike before the year is out, keeping the path of interest rates in focus heading into the fourth quarter.
TSP Fund Returns for September 16
| Fund | Daily Change |
|---|---|
| G Fund | +0.01% |
| F Fund | −0.03% |
| C Fund | −0.44% |
| S Fund | −0.35% |
| I Fund | +0.02% |
The C Fund, which tracks the S&P 500, finished down 0.44%, while the S Fund also declined. The relatively modest moves were a reminder that changing interest-rate expectations can still produce noticeable swings in TSP stock and bond funds as investors weigh the Fed’s next steps.