Announcer:
4 Your Money is brought to you by NelsonCorp Wealth Management.
Brandy Auterson-Hurst:
It’s now time for 4 Your Money. We’re joined by David Nelson, CEO of NelsonCorp Wealth Management. Welcome back, David.
David Nelson:
Thanks, Brandy. Appreciate it.
Brandy Auterson-Hurst:
So David, it sounds like there’s been some unusual movements in short-term interest rates recently. What’s going on there?
David Nelson:
Yeah, it’s a good one to talk about because it’s not something that most people really ever see, but it plays a big role in the financial system day to day. What my chart today, essentially is attempting to do is to try to explain a little bit of what’s happening here. And it’s color coded like always, but the concept is that normally what you find is that the rates, so those are the blue lines there, they should stay within the red bands. And the red bands are basically what the Federal Reserve is putting out as the range as far as for short-term type, what’s called paper. And so when you see which we’ve circled, we have three incidents in a relatively short period of time where the lines have jolted above the red top bar. That’s generally not the type of sign that you want to see as far as that’s something’s a little wacky as far as in the marketplace there. So it’s a combination of the Fed pulling back a little bit, as far as trying to shrink some of the balance sheet as well as issuing more T-bills versus long-term government bonds.
Brandy Auterson-Hurst:
Okay. So what does this mean for everyday investors?
David Nelson:
Well, I think it pretty much translates into volatility. Volatility in the short term. Hopefully we can get our arms around some of this stuff, but the spikes is not what we want to see. We’d like to see staying within those bands that are out there, but volatility is probably the key phrase.
Brandy Auterson-Hurst:
All right, David, thanks for joining us today.
David Nelson:
Thank you.
Brandy Auterson-Hurst:
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This video includes a paid appearance.