What the Bond Market is Saying
We all know that interest rates are in an uptrend as the Federal Reserve has and will continue to consistently raise rates. That, of course, is the death knell for bonds. However, something recently happened on the way to the forum.
US Treasury bonds have hardly moved in over a month, despite yet another 25 basis rate hike by the Fed with more on the horizon.
That may seem like a godsend; however, it’s not. If bonds don’t drop as interest rates rise, it could mean three things:
- There is a recession looming, even if we don’t see it yet.
- There will be no major legislation that will be enacted into law this year (i.e. health care, tax reform, additional deregulation, or infrastructure spending).
- “Sell in May and Walk Away” might be a real threat this year.
It’s still too early to tell and I’m ready to throw in the towel. It is likely that this is just a normal correction in a strong, but aging, bull market. So be sure to plan ahead the same way we do for our clients.
If you would like to learn more about our disciplined investment and planning approach that manages risk and delivers returns while being conscious of forward-looking tax-strategies, give me a call for a free no obligation consultation today.
Cheers -Keith Springer