Welcome to our March 2023 Market Update Video!
How are you feeling about the current markets? Are they on your mind, or have you been too busy enjoying life? If it’s the latter, then good for you!
February saw the markets give back some gains…2.5% to be exact as reflected in the S&P 500 broad stock market index.1 So why did the market give back gains?
In my opinion, we only need to look one place to see the reason. The 10-year U.S. Treasury yield moved up to 3.996%....this is almost an 18% move in only 28 days!2 Interest rates are normally inversely correlated with prices, so when rates are moving higher, the price of bonds is dropping.3 To take it a step further, I feel spiking interest rates may indicate there is a problem in debt markets, which may spillover to stocks.
So how do we invest during a time like this? As we talked about last month, higher interest rates aren’t all bad. We may hold US Treasuries to actually earn interest. When stocks decline, it could present an opportunity to buy good companies at cheaper prices. Many names I believe are worth owning historically have paid consistent dividends as well.
Lastly, if markets were too really get ugly I feel precious metals and commodities offer us another potential hedge.
Please let me know if you have any questions or concerns. Thank you so much for your support as we move ahead and await what markets have in store for us.
Successfully,
Tim
Disclaimers and Sources
1 Source: Thomson ONE Reuters, S&P 500, 3/7/2023
2 Source: CNBC, 10-Year U.S. Treasury Yield, 3/7/2023
3 Source: Investopedia, Relationship between Interest Rates and Bonds, by Nick Lioudis
The S&P 500 Index is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
The NASDAQ Composite Index measures all NASDAQ domestic and non-U.S. based common stocks listed on The NASDAQ Stock Market. Bonds are subject to credit, market, and interest rate risk if sold prior to maturity.
Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
The fast price swings in commodities will result in significant volatility in an investor’s holdings. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors.
Government bonds and Treasury bills are guaranteed by the US government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value.
Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.