June 22, 2024
What to Do as Rates Trend Lower
Dear Subscriber,
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| By Jim Nelson |
You may not pay attention to this. In fact, you may even think this doesn’t matter.
But indirectly, this is a crucial indicator …
The 10-year Treasury rate currently sits at 4.22%.
That’s still up from where it started the year, below 4% … but is a full 50 basis points below its peak in late April.
In fact, the past two months have started the 10-year rate on a downward trend.
Year-to-date chart of the 10-year Treasury rate.
Source: YCharts.
Click here to see full-sized image.
As you can see, this broke the steady climb it was on to kick off 2024.
Why does this matter? Because almost every other interest rate — for your mortgage, your savings account and your credit cards — is related to this one.
So, when it changes direction, it’s important.
According to the Fed, inflation continues to cool. So, those hypothetical Fed rate cuts are back on the table. That’s a major reason for this reversal.
How many times will the Fed cut rates? Tough to tell. It was likely to be three when the year started. Recently the Fed signaled just one likely cut.
A recent Reuters poll found that forecasters are now predicting two.
But what the Fed does and where interest rates are today are not as important as where they end up.
Our Director of Research & Ratings Gavin Magor points this out through the stylings of Bruce Springsteen:
“I'm goin' down
I'm goin' down
Cause you ain't around baby
whole world's upside down”
—Bruce Springsteen
I am quite certain “the Boss” Bruce Springsteen wasn’t talking about interest rates in his famous song but rather a troubled relationship … but it seems that interest rates are finally going to start coming down later this year.
So, in that context, we’ll agree with the Boss.
We here at Weiss Ratings want all investors to be prepared for what’s on the financial horizon just as a musician wants to know the next note.
The main reasons for the Federal Reserve anticipating a rate cut later this year? New slightly lower inflation reports and a cooling labor market are at the top of the list.
At this point, I’m not sure if I would exactly call it a “soft landing.” But it’s a lot better than expected considering how high inflation was last year.
It is very encouraging to see inflation finally start to come down. And in general, I am still optimistic about the market … while staying cautious.
I do have two ways for investors to take advantage of this likely economic path.
You can read on and find out what those are here …
Of course, Gavin wasn’t the only one with insights … or ways for investors to take advantage this week. Here’s what the rest of your editors had to say:
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One of the fastest-growing industries is digital advertising. Don’t believe me? Take it from our Tech & Biotech Investing Strategist Michael A. Robinson. He found a company with an advertising marketplace that handles more than 10 million queries per second. And he thinks this is a great chance to get in on this ride.
Have a great weekend!
Jim Nelson
Managing Editor, Weiss Ratings Daily
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