Bond Rates Rising… Where’s the End?

This morning, the US 10-Year US Treasury is yielding 2.818%.  The US 2-Year Treasury is yielding 2.46%.  Just 3.5 months ago, the 10-Year was yielding 1.5% and the 2-Year .73%.  Talk about a fast rate rise!!

I can’t help but speculate how much inflation and interest rate hikes has the bond market already priced in?  My best guess at this point is market interest rates have priced in a significant amount of the Fed’s future rate hikes.  I expect interest rates the market controls, and the Fed, to overshoot rates to the high side.  I’ve been alluding that bond yields are starting to become attractive.  The question is… how much more attractive?

Hopefully, not much more attractive from here!

Markets Lower Last Week

Most market indexes dropped last week, with the Dow down (.78%), the S&P 500 (2.11%) and the Nasdaq (2.02%).  Small caps bucked the weekly trend moving higher by .53%.

Over the pond, foreign stocks shed (1.02%) and emerging markets lost (1.23%).

The Week Ahead

This week features a plethora of corporate earnings reports….  It will be important to hear how Corporate America is dealing with higher rates and higher input costs.

We’ll also hear reports on new home builds and sales of existing homes.  I expect rising mortgage rates will put a dent into these reports. I expect these reports over the next couple of months to get worse before getting better.

And of course, the news outlets and media will continue to push negative narratives about inflation, the war, politics etc.  My suggestion – turn off the TV, put down your phone, get outside and enjoy the warming weather.

2022 Income Taxes

As today marks the end of tax season for most taxpayers, it’s never too early to start planning your 2022 income taxes!

As some of our clients are aware, we now have tax software that can be used to project and plan your taxes.  Is a Roth conversion right for you?  How much should you contribute to charities with a Qualified Charitable Contribution?  Are your current distributions forcing you to pay the Medicare Income Related Monthly Adjustment Surcharge?

With this new software, we are now in a better position to proactively assist with planning your tax situation, as we can model several hypothetical strategies to assess what makes the most sense for you.

We are asking all clients to forward a copy of their 2021 tax return.  This will greatly assist our planning as we’ll be ready to discuss your situation during one of your upcoming reviews.

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Paul Levin CFP®, ChFC®, RICP®

Retirement Income Certified Professional®