The Federal Reserve began lowering interest rates this year and has now done so a total of three times (with the latest cut just days ago). The graphic below from the Wall Street Journal shows how the stock market has fared in the six months following a string of three rate cuts. As you… Read more »
Economist and investors have long been pondering the cause of the structural decline in interest rates over the past 40 years, blaming stubbornly low inflation, low growth overseas and the recent financial crisis. But is the explanation something much more simple?
Many investors felt that Altria (formerly known as Philip Morris) was as safe an investment in the stock market as possible. The company’s customers are literally addicted to its product (nicotine) and the company offered a very high dividend yield.
For those looking to refinance their mortgage (or with children looking to purchase a new home) now may be a great time: the average 30-year, fixed rate mortgage now stands at around 3.56%, a three-year low.
The last week has seen a sharp reversal in the best and worst performing stocks. The stocks driving the market gains throughout the year have given way to the laggards over the last few trading sessions.
Economics 101 tells us that lower supply (all else equal) will result in higher prices. And that’s just what’s happened, as Municipal bond returns have outpaced taxable bond returns over the last ten years (4.1% to 3.9%).
The U.S. 10-Year Treasury Yield has been cut in half since the fourth-quarter last year (3.2% 1.6%), causing bond prices to rise significantly (taxable bond index is up nearly 9% year-to-date).
The financial world has been atwitter about the inversion of the yield curve. It is a phenomenon in the bond market in which longer-term interest rates fall below shorter-term interest rates, and has historically been a warning sign that a recession could be on the way.
The inversion of the yield curve (where short-term rates are higher than long-term rates) is one of the most reliable predictors of a recession. As it happens, the Treasury yield curve is currently inverted with the 10-Year yield (1.6%) well below that of the 3-Month yield (2.0%). So does that mean all signs are pointing to a recession?