Tentative Times, Disconcerted Consumers, Volatile Markets

Doug Drabik discusses fixed income market conditions and offers insight for bond investors.

Higher for longer. The Federal Reserve will likely maintain higher interest rates and remain open to another rate hike. Borrowing costs for households, businesses and governments have risen with soaring rates.

Inflation remains sticky…yet growth in the U.S. economy remains resilient.

The government will likely increase the supply of government bonds and bills to cover the widening deficits.

The national average 30-year mortgage rate just climbed over 8%, nearly doubling the 4.26% average over the past 10 years. This would take a $300,000 30-year monthly loan payment of $1,477 up 49% to $2,201. New car financing rates are at 6.6%. The amount of credit card debt outstanding just hit an all-time high sitting 36% higher than the 20-year average and increasing in size for 10 of the last 12 months reported. Student loan borrowers are now being called upon to pay. Food, gas and other staples cost more at a time when mortgage/rent, auto payments and mounting credit card debt are eating away at monthly disposable income.

Geopolitical restlessness is skyrocketing. The world affairs seem as unsettled as they’ve been in this lifetime.

Yet…there is one thing that is certain within the investment world. Interest rates are higher than they have been in over 16 years and income opportunities for individual bond buyers are abundant. Take advantage of these opportunities while you can.

 Treasury Yield Curves