{"id":662,"date":"2021-12-06T00:00:00","date_gmt":"2021-12-06T00:00:00","guid":{"rendered":"https:\/\/www.retirementrefined.com\/index.php\/2021\/12\/06\/powell-omicron-one-two-punch\/"},"modified":"2021-12-06T00:00:00","modified_gmt":"2021-12-06T00:00:00","slug":"powell-omicron-one-two-punch","status":"publish","type":"post","link":"https:\/\/www.retirementrefined.com\/powell-omicron-one-two-punch","title":{"rendered":"Powell\/Omicron, One-Two Punch"},"content":{"rendered":"

Federal Reserve Chairman Powell and Omicron gave the markets a one-two punch<\/strong> last week.<\/strong>\u00a0 The markets acted as expected upon the Omicron discovery, with a minor pullback the Friday after Thanksgiving.<\/p>\n

Then Powell<\/strong>\u00a0suggested the term \u201ctransitory\u201d inflation be retired<\/strong>, after he insisted it was accurate for the last 7 months<\/strong>.\u00a0 Powell then suggested the monthly $120 billion of bond purchases may end much sooner<\/strong> than next June, leaving many to believe rate hikes are only around the corner.<\/p>\n

The result, a weekly drop in the major stock indexes.\u00a0 The Dow<\/strong> Jones lost<\/strong> a mere (.76%),<\/strong> the S&P 500 (1.18%),<\/strong> the Nasdaq Composite (2.60%)<\/strong> and the Russell 2000<\/strong> (3.82%).\u00a0 <\/strong>Pure technology stocks got hit the hardest as the thought of rising rates will hurt technology stocks first.<\/p>\n

Foreign stocks<\/strong> for the week were down (.94%)<\/strong> however Emerging Market stocks<\/strong> rose .20%.<\/strong><\/p>\n

Bond Conundrum, Again?<\/strong><\/p>\n

\"\"Do you recall<\/strong> when Alan Greenspan was raising rates<\/strong> .25%, each meeting, during the period of 2004 through 2006?\u00a0 Short term rates increased from a low of 1% to<\/em> 5.25%, however longer-term yields did not respond and stayed low<\/em>.\u00a0 Greenspan called this a “conundrum!”<\/strong>\u00a0 Well, by the 3rd<\/sup> quarter of 2007, the housing market and mortgage bonds imploded.<\/p>\n

Let\u2019s look at last week<\/strong> after Powell\u2019s news blast….\u00a0 Short term, 2-year Treasury<\/strong> rates rose as high as .65% before closing on Friday @ .595%.<\/strong>\u00a0 The 2-year rate started 2021 with a yield of .12%.<\/p>\n

Our 10 Year US Treasury<\/strong> rate dropped last week, closing on Friday @ 1.34%.<\/strong>\u00a0 The 10 Year rate started 2021 with a yield of .91%.\u00a0 The high for the year was on approximately 3\/31\/21 @ 1.75%.<\/p>\n

Is the yield curve (the difference between 2 year and 10-year rates) suggesting inflation and growth will moderate next year?\u00a0 Definitely like to have the crystal ball for that answer!!\u00a0 As always, time will tell!!<\/em><\/strong><\/p>\n

What To Do Now?<\/strong><\/p>\n

Historically when the Fed begins to pull back liquidity, the market responds favorably during the early phases, until the Fed goes too far, raising rates.<\/p>\n

It\u2019s very important that current and soon-to-be retirees<\/strong>\u00a0know<\/strong> exactly how you\u2019ll get your income during this potential tightening phase<\/strong>.\u00a0 You do not want to be forced to sell assets at an inopportune time to meet your known income needs.<\/p>\n

I suggest having your needed funds positioned appropriately for income, and not being overweight in stocks or bonds in your portfolio. \"\"<\/em><\/p>\n

A well-diversified<\/strong> and allocated portfolio<\/strong> positioned specifically to your income<\/strong> needs<\/strong> is critically important<\/strong> to achieving peace of mind<\/em><\/strong>.<\/p>\n

For non-clients, if you would like an objective opinion of your planning and investments, please reach out to our office to schedule a complementary consultation. You can schedule on our website by clicking HERE<\/a>, or call Ellen at 856-354-3200 ext. 205.\u00a0<\/b><\/em><\/p>\n

\u00a0<\/em><\/strong><\/p>\n

\u00a0<\/em><\/strong><\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Federal Reserve Chairman Powell and Omicron gave the markets a one-two punch last week.\u00a0 The markets acted as expected upon the Omicron discovery, with a minor pullback the Friday after Thanksgiving. Then Powell\u00a0suggested the term \u201ctransitory\u201d inflation be retired, after he insisted it was accurate for the last 7 months.\u00a0 Powell then suggested the monthly […]<\/p>\n","protected":false},"author":3,"featured_media":665,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"post_statement":"","post_description":"","post_cta":"","post_button":"Read More","post_button_url":"","compliance_id":"","post_disclaimer":"","footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/posts\/662"}],"collection":[{"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/comments?post=662"}],"version-history":[{"count":0,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/posts\/662\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/media\/665"}],"wp:attachment":[{"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/media?parent=662"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/categories?post=662"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.retirementrefined.com\/wp-json\/wp\/v2\/tags?post=662"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}