Here are some things you might consider before saying goodbye to 2021.
Treasury rates have surged to their highest levels in recent years due to a combination of concerns around inflation, oil prices, the national debt, and the Fed. The 10-year Treasury yield is once again above 4.6% and the 30-year has been above 5% for the longest streak since 2007.1 In general, this is positive for long-term investors since higher yields support portfolio goals such as income and stability.
In our modern world, computers and cell phones have become everyday necessities that are expected to simply work. Yet, there is unbelievable complexity behind not only the engineering that makes them possible, but also in the supply chains that allow millions of devices to be manufactured.
The baseball player Yogi Berra once said that “a nickel ain’t worth a dime anymore.” With inflation still elevated, many investors and consumers may be feeling this way as well. Not only are everyday costs higher due to energy prices, but short-term interest rates have fallen over the past two years.
This means that investors who have a significant portion of their portfolios in cash are seeing the purchasing power of their savings decline both as prices rise and as cash yields fall. With money market fund assets near record highs at $7.9 trillion, it’s likely that many investors have cash allocations that exceed what is appropriate for their financial plans.1 What do investors need to understand about the role of cash in their portfolios today?
The U.S. dollar affects all aspects of financial markets, the economy, and everyday life. Not only is the dollar an important unit of currency used to purchase goods and services, but its value is also affected by expectations around interest rates, inflation, trade, and more.
There is a saying that smooth seas do not make skillful sailors. When it comes to investing, at no time has this been more true than during the first half of the year. Investors faced major events including the war in Iran, oil prices pushing inflation to multi-year highs, and questions around artificial intelligence (AI). And yet, markets have climbed to new all-time highs, corporate earnings have grown at a double-digit pace, and many asset classes have performed well. The first six months have been a reminder of the importance of staying invested and maintaining a longer time horizon.
