Executive Summary: Pension discount rates continue to move higher following the movement in US Treasury bonds resulting in pension plans obtaining higher funding ratios. The impact of higher prices is beginning to influence the domestic economy causing the Federal reserve to take a more aggressive stance. Capital markets have responded by exhibiting mostly negative returns for the first quarter of 2022. State of the Markets In recent Insights edi..

State of the Markets Covid continues to be the largest threat to our economic growth, especially as the differing variants progress through the population. Last quarter, we were negatively impacted by the Delta variant, and now we are reckoning with the effects of Omicron. While this variant is much more contagious, it seems to be less virulent. Some medical experts agree this is how a viral pandemic ends – millions get infected by a much less ..

State of the Markets The COVID Delta variant had a significant impact on third quarter economic activity.  GDP is expected to have increased 2% - 3% in the quarter, which is well below the 6.7% we saw in the second quarter.  Daily cases in the U.S. increased from 25,000 to 160,000.  Airline travel decreased, borders closed, and it seemed as though we headed back into renewed pandemic restrictions.  August nonfarm payrolls were expected to inc..

State of the Markets Unlike the first quarter where we saw interest rates rise in anticipation of stronger growth, the realization of a stronger economy has resulted in rates falling over the second quarter. For example, the 10-year Treasury yield fell by 27 basis points and the long 30-year bond yield declined by 30 basis points. Despite commodity prices moving higher, homes selling for more than list, a waiting list to buy most major appliances..

State of the Markets The combination of multiple stimulus packages, millions of people getting vaccinated, and a robust economic forecast have resulted in a sharp increase in interest rates over the first quarter of 2021.  Short-term rates barely changed since our last update, although the 5-year Treasury note yield increased 56 basis points, the 10-year Treasury-note yield increased 81 basis points, and the yield on long 30-year bonds increased..

“An End in Sight” State of the Markets Let’s begin by reviewing what happened in the capital markets and the economy over the last quarter of 2020.  Short-term interest rates barely changed while the 10-year Treasury note yield increased 23 basis points, and the yield on the long bond increased 19 basis points.  The S&P 500 advanced 12% during the quarter, the NASDAQ advanced 16%, and the small cap index increased 31%.  Annual volatility..

The Rebound Continues State of the Markets A recap of the changes that occurred over the 3rd quarter in the bond market and the equity market seems to be appropriate given this year’s unusual pandemic situation.  Treasury interest rates barely changed during the 3rd quarter.  The yield on the 2-year maturity Treasury fell 3 basis points, the 5-year maturity treasury note also fell 3 basis points and the 30- year T-bond yield increased 3 basis..