Short-term investors have gotten hurt in a repeat pattern while trying to predict the Federal Reserve’s actions. Long-term investors may win their battle.
The Federal Open Market Committee raised the federal funds rate by 0.50% on Dec. 14 to a range of 4.25% to 4.50%. The expectation of a slower pace of rate increases following four straight moves of 0.75% had some investors thinking differently: That inflation was easing enough for the federal funds rate to hit its peak for this economic cycle sooner rather than later. Again.
Short-term investors can get burned when Powell doesn’t say precisely what they want him to say. Long-term investors remain convinced that the U.S. economy will head into recession as a result of the Fed’s tightening of monetary policy to fight inflation. This is made clear by the inverse rate curve, with two-year U.S. Treasury notes TMUBMUSD02Y, 4.174% yielding 4.27%, while 10-year notes TMUBMUSD10Y, 3.475% yield only 3.50%.
Read: Largest monthly rental decline ‘decisively closes the door’ on two years of pandemic-era rent increases An argument that the Fed should halt rate increases Rex Nutting argues that the FOMC blew it on Dec. 14 by not calling an end to interest rate increases. He digs deeply to make the case that the economy is already “skating very close to a recession.“How to start over and put your financial life in order Quentin Fottrell writes The Moneyist column to provide all sorts of financial advice, especially as it relates to difficult family situations.
Two year-end must-do’s: rebalancing and required minimum distributions Many people saving for retirement are disciplined enough to keep pouring money into a group of mutual funds for diversification. But over time, this can lead to a higher concentration in certain assets. Beth Pinsker suggests a measured approach to rebalancing once a year.
A Caribbean vacation home might not be out of reach You might associate the Caribbean with beautiful beaches, hurricanes, Sam Bankman-Fried or all three. But there is quite a bit of variety when it comes to pricing. And not all the islands have the same level of risk from tropical storms. Here’s a detailed look at several Caribbean locations inside and outside the hurricane belt.
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