August 16, 2022

Since January, the American people have had inflation at the forefront of their minds; higher gas prices, higher costs at the grocery store, higher prices for raw goods have all spurred this major concern. There may be a light at the end of the tunnel. Since the release of the July price index, there is a rising belief that that inflation is slowing.

Projections of inflation over the next twelve months are expected to fall around 3.3% which is about 1/3rd of the rate that has been seen up year to date. Current inflation projections are virtually analogous to where they stood last year. While some investors are skeptical this will be any different than last year, the actions by the Fed raising interest rates and continuing to do so provide a strong basis for a period of slower inflation. Investor sentiment is mirroring this belief; trades within the tech sector are up dramatically from June and treasury yields falling below their peak in June as well.

Graph from (8/14/2022)

While there is still significant concern over inflation, many indicators show that rates are trending properly. All facts considered, now is an ideal time to reassess allocations within investment accounts—particularly in fixed income. With interest rates rising, bond funds can be negatively impacted. As interest rates rise, the value of bond funds decrease resulting in fluctuation of the more conservative investments within each individual’s portfolio. On a hopeful note, there are also alternatives to bond funds, which also may provide stabilization during volatile times.

If you have any questions or are looking to hear more about strategic financial plans during periods of rising interest rates, let’s start a conversation, today.