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Short-term and long-term Treasury yields have risen quickly over the past month. This is in part because of U.S. inflation concerns and renewed energy supply disruptions in the Middle East, but also because of the appeal of other debt – be it overseas or in the corporate market with AI-related bonds. This has led the Federal Reserve to hike .25bps yesterday in an attempt to get ahead of inflation.
This might sound concerning, but markets already expected this, so don't assume a sharp sell-off will happen. The more important number I listened to today was the expected PCE inflation for 2027 which was 2.3% down from the 2026 number of 3.7%. This would be a welcome number for all of us.
Behind the inflation, companies are growing at a robust pace. We are balancing corporate growth with uncertainty coming with inflation, energy, and geopolitical concerns. As I have mentioned in prior emails, a positive resolution to the conflict in the middle east would address the three issues mentioned above. The quicker the resolution, the quicker inflation will be dealt with.
Many of you have asked about the midterm elections, for now it is too early to determine where we are headed. As we get a clearer picture of likely outcomes, we can determine what areas of the market we should have our capital deployed.
For those of you with cash on hand, an increase in the fed fund rate should lead to higher interest rates at your banks whether that be money markets, CDs, or savings. For those looking to invest, there are opportunities present in all markets. For now, we would suggest maintaining your current holdings and as always, we are here for you should you need us.
Stay Safe,
Scott
Scott M. Frayler, President
www.bluelinewealthmanagement.com
SCPBA Complex
500 Express Drive South
Suite 1, 1st Floor West
Brentwood, NY 11717
(631) 617-6811
(631) 617-6815 Fax
scott.frayler@lpl.com
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Securities offered through LPL Financial Member FINRA/SIPC
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