Recap | Week Ahead | Competition for Capital

“The bond market is always interesting because the price of safety defines risk for the entire market. Not just for financial markets, but for savers too and in life.” - Allison Schrager

Last week's market recap:

The S&P 500 closed the week up 1.23%. Year-to-date the index is up 14.09%
NASDAQ closed the week up 2.07%. YTD the index is up 16.98%
U.S. Aggregate Bond index closed the week down -.82%. YTD the index is down -2.28%
10-Year Treasury Rate increased, ending the week at 5.17% up from 5.01% the prior week
Fed Funds Target rate remains at 3.75-4.00%
The 1-Year Treasury is yielding 4.54%
A 6 Month Treasury is yielding 4.39%

The week ahead:

PCE (Inflation data)
Nonfarm Payrolls
U.S. / Iran Conflict
Corporate Earnings: CarMax, Carnival Corp., Vail Resorts, and Conagra Brands

Quick Comments:

The AI buildout is tapping the debt market for funding. Government borrowing hasn’t slowed. We’re witnessing an uptick in the competition for capital, and this is driving yields higher. (More bonds being issues means the price of bonds goes down = Higher Bond Yields).

The Fed’s rate hike strengthens their credibility. The economy is growing and it would probably take a larger change in Fed policy to derail markets.

Companies with strong earnings and balance sheets have more room to absorb higher rates vs leveraged borrowers.

For many investors looking to add or rebalance, U.S. quality companies and selective fixed income with attractive coupons should be in focus.

As always, let us know if you have any questions.

Best,

CRA Investment Committee

Matt Reynolds CPA, CFP®

Tom Reynolds, CPA

Robert T. Martin, CFA, CFP®

Joe McCaffrey, CFP®

Gordon Shearer Jr., CFP®

Jeff Hilliard, CFP®, CRPC®

Phillip Tompkins, CFP®

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