Market Updates.

  • While we have observed some unexpected fluctuations in the economy recently, they don’t appear to be extreme, and the economy remains resilient and strong.
  • The Bureau of Labor Statistics October report showed a cool down as U.S. nonfarm payrolls only increased by 150,000, less than expected, while the unemployment rate rose to 3.9%.
  • The October Consumer Price Index, which measures consumer price changes over time (excluding food and energy) was lower than anticipated with a two-year low of 4%.
  • This month, the U.S. 10-year Treasury yield fell by almost 9 basis points, and the 2-year Treasury yield has fallen nearly 10 basis points.
  • We saw an 0.8% decrease in import prices, along with a 0.5% decline for the Producer Price Index in October, the biggest drop since April 2020.
  • Although the Federal Reserve opted not to raise interest rates in October, and it is encouraging to see the pace of inflation begin to slow, the Fed is still committed to enforcing a restrictive monetary policy through rate increases to achieve a decreased 2% inflation rate.
  • Despite decreases in the jobs market, the potential slowing of inflation and interest rate hikes encourages us. No matter what, we won’t leave your financials up to chance or wait to see what the market does tomorrow. The Triangle Financial team always takes a long-game perspective, so you can rest assured we keep your future security in focus.

Sources

 

Join us for the next Ask Triangle!

Securities and Advisory Services offered through Harbour Investments, Inc. Member SIPC & FINRA.

Market Updates.

Overall, the U.S. economy continues to be resilient.

  • Recent market fluctuation may be linked to the September jobs report, which was unexpectedly positive. Payrolls and hourly earnings increased, and the unemployment rate is slightly lower than expected. Job growth continues in the leisure and hospitality industries.
  • Although the Federal Reserve didn’t raise interest rates in September, we still anticipate additional rate increases before year end.
  • Consumers are selling out of long-term treasury bonds for liquidity, which makes sense with the 10-year treasury yield climbing to 4.88%. This is close to the level it was prior to the 2008 financial crisis.
  • Economists continue to push out the timeline for when a recession could occur. That, combined with the fact that the only thing that’s been consistent with the market is that it’s unpredictable, means we can’t forecast for certain how the market will perform tomorrow.
  • At Triangle Financial, we focus on a long-game perspective. Instead of making decisions based on what we think may happen tomorrow, we plan according to what we know right now. That way, you can rest assured that we are always keeping our eye on your future financial security.

Sources

Join us for the next Ask Triangle!

Securities and Advisory Services offered through Harbour Investments, Inc. Member SIPC & FINRA.

Market Updates.

Overall, the economy has proven resilient and remains strong.

  • Gas prices have been slowly rising mainly due to OPEC (Organization of the Petroleum Exporting Countries) cutting petroleum production by one million barrels per day.
  • Russia and Saudi Arabia also extended their production cuts through the end of the year.
  • We may also experience temporary gas price increases due to Florida hurricanes, but as long as major refineries are not impacted, prices should bounce back.
  • Inflation rose less than expected over the last month by just 0.2% to the current rate of 3.2%.
  • Employment and job openings have dropped resulting in the unemployment rate rising to 3.8%.
  • Because the inflation rate remains higher than the Federal Reserve would like (3.2% compared to 2%), two more interest rate increases are expected. The Stock Market was down at the beginning of the month due to the latest interest rate increase, but the Market is now back up.

Sources

Join us for the next Ask Triangle!

Securities and Advisory Services offered through Harbour Investments, Inc. Member SIPC & FINRA.

Market Updates

  • Overall, the economy continues to be strong and resilient.
  • A recent Jobs Report from the U.S. Bureau of Labor Statistics showed 339,000 jobs added and that the unemployment rate rose to 3.7%. It is interesting to note that the jobless rate is both the highest it’s been since October 2022 and near the lowest since 1969.
  • The U.S. Debt Ceiling deal was reached, which includes suspending a limit until 2025 and an increase in the debt ceiling.
  • The Stock Market has seen some successes recently, notably in the tech sector. The NASDAQ has now been on the rise for six consecutive weeks.
  • With inflation still higher than desired, the Federal Reserve is expected to raise interest rates again in July.
  • Despite the increase of interest rates ten time over the last year, consumers seem to be optimistic based on spending reports.
  • We still haven’t seen a marked increase in gas prices, though they may go up later this summer. Saudi Arabia announced a plan to cut oil output in July, which could potentially affect prices.

As these updates indicate, the economy is not always predictable. If you’ve been keeping up with “Ask Triangle” on a monthly basis, you’ve likely noticed a few unexpected outcomes from previous predictions. That’s why our team places value on diversified portfolios, which helps us to proactively manage risk and increase stability in a volatile market.

Ask Triangle Question

Q: Are there any updates to you’re hearing about a recession, such as timing and depth?

A: Based on May meeting minutes from the Federal Reserving, a recession is still anticipated sometime in the fall or early winter. Fortunately, it is expected to be a shallow recession. It’s worth noting that the timing of when the recession is expected continues to be pushed further into the future. The uncertainty around timing is likely related to the surprisingly resilient market and consumer optimism, despite inflation and the constant interest rate increase from the Federal Reserve.

In preparation for the possibility of a recession, let us know if you’d like to re-evaluate any or all of the following:

  • Cash-flow needs and distribution methods
  • Emergency savings, and how to build some
  • Other concerns around financial stability in an uncertain economic outlook

Our goal as your financial advisory team is to help you navigate uncertain times like these. Please don’t hesitate to reach out to us for any reason or concern!

Sources

Join us for the next Ask Triangle on Friday, July 7th!

Securities and Advisory Services offered through Harbour Investments, Inc. Member SIPC & FINRA.

Market Updates

  • According to the recent U.S. Bureau of Labor Statistics (BLS) Employment Situation Summery for April, the economy continues to be strong with unemployment low at 3.4% and job growth reaching 253,000. In particular, the leisure and hospitality industry has seen an upward trend in employment as consumers spend more on travel and hotel stays, also a positive sign for the current economy.
  • The Federal Reserve again raised interest rates in April from 5% to 5.25%. In June, rates are likely to rise again in an effort to decrease inflation from the April Consumer Price Index (CPI) report of 5% down to 2%.
  • On May 9, Federal Reserve President John Williams spoke to the New York Economic Club sharing that interest rates may continue to rise and that getting the CPI back to 2% could take as long as two years.
  • While there are still conflicting opinions, there is a general consensus that some level of recession can be expected by fall. Considering continued job growth and economic resilience despite increasing inflation and interest rates, a recession is likely to be smaller in scale.
  • Surprisingly, oil prices are lower than expected despite supply cuts by OPEC+ producers. This is considered to be due in part to lower demand as China reopens their oil production. However, warmer summer weather typically increases travel and demand, which will likely result in higher gas prices.


Sources

Join us for the next Ask Triangle!
Securities and Advisory Services offered through Harbour Investments, Inc. Member SIPC & FINRA.

“If the current annual inflation rate is 7.9 percent, why do my bills seem like they’re 10 percent higher than last year?”1

Many of us ask ourselves that question, and it illustrates the importance of understanding how inflation is reported and how it can affect investments.

What Is Inflation?

Inflation is defined as an upward movement in the average level of prices. Each month, the Bureau of Labor Statistics releases a report called the Consumer Price Index (CPI) to track these fluctuations. It was developed from detailed expenditure information provided by families and individuals on purchases made in the following categories: food and beverages, housing, apparel, transportation, medical care, recreation, education and communication, and other groups and services.2

How Applicable Is the CPI?

While it’s the commonly used indicator of inflation, the CPI has come under scrutiny. For example, the CPI rose 7.9 percent for the 12-months ending in February 2022. However, a closer look at the report shows movement in prices on a more detailed level. Energy prices, for example, rose 25.6 percent during those 12 months.1

Are Investments Affected by Inflation?

They sure are. As inflation rises and falls, three notable effects are observed.

First, inflation reduces the real rate of return on investments. So, if an investment earned 6 percent for a 12-month period and inflation averaged 1.5 percent over that time, the investment’s real rate of return would have been 4.5 percent. If taxes are considered, the real rate of return may be reduced even further.3

Second, inflation puts purchasing power at risk. When prices rise, a fixed amount of money has the power to purchase fewer and fewer goods.

Third, inflation can influence the actions of the Federal Reserve. If the Fed wants to control inflation, it has various methods for reducing the amount of money in circulation. Hypothetically, a smaller supply of money would lead to less spending, which may lead to lower prices and lower inflation.

Empower Yourself with a Trusted Professional

When inflation is low, it’s easy to overlook how rising prices are affecting a household budget. On the other hand, when inflation is high, it may be tempting to make more sweeping changes in response to increasing prices. The best approach may be to reach out to your financial professional to help you develop a sound investment strategy that takes both possible scenarios into account.

1. USInflationCalculator.com, 2022
2. BLS.gov, 2022
3. This is a hypothetical example used for illustrative purposes only. It is not representative of any specific investment or combination of investments. Past performance does not guarantee future results.

 

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.
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