Interest Rate update for Friday May 6, 2022. Currently the Nasdaq and Russell 2000 small cap indexes are in bear markets (down over 20% from their highs) while the Dow and S&P 500 indexes are in major, double digit corrections off their highs. Meanwhile, The 10-year US Treasury bond has more than doubled this year to 3.12%
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| US Treasury Interest Rates Graph |
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| Market Update Closing Values |
I'm so old I remember when I had a VARIABLE loan at 14.0% a year to buy my first home, a townhouse in Sunnyvale CA! I was sure jealous of my parents who had a CAL-VET loan at fixed at 4.0%. With that memory, rather than using cash to pay off my home loan early, I locked in a fixed rate mortgage at 3.375 % and put the cash in TIPS and I-Bonds. Some of my iBonds have base rates of 3.0% and will pay 10.23% for the next six months!
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| CPI vs Fed Funds Rate vs Expected 10-Yr Inflation |
A rising Fed Funds Rate was not bad news for the stock market coming out of the Great Recession and the telecom/internet bubble collapses:
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| US Fed Funds Rate vs. S&P 500 |
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| TIPS Core Yield vs S&P 500 More about TIPS including when to buy them is covered in my newsletter. |
Can the Fed engineer the elusive "soft landing" to tame inflation currently running at 8.5% without pushing the US economy into another recession?
How do you invest in such difficult times?
First off, I'd start with people who have been recommending TIPS and I-Bonds in their newsletters as I have... start by reading:
Then subscribe to:
Kirk Lindstrom's Investment Letter Service- Subscribe NOW and get the May 2022 Issue for FREE!!!
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