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:
Thank you very much.
Brandy Auterson-Hurst:
So, interest rates have been a big topic lately, and it sounds like what the market is expecting has changed pretty dramatically, so walk us through what you’re seeing.
David Nelson:
Well, yeah, this has certainly been one of the bigger surprises to start the year, and I think what we find is that the market’s been really caught off guard. The chart that I brought along today is looking at expectations for interest rates and basically showing how it’s shifted over last several weeks. In the blue line, I like to think of that as kind of like a thermometer, and the lower the line, the more rate cuts that the market is expecting. Back in January, the thermometer was pretty low and most traders thought that the Fed would cut rates two or maybe even three times as far as during the year.
Now what we’ll notice is by the dotted line is that the Fed basically is looking to be on hold. That simply means that the market expects no cuts and no hikes. But this month, the blue line shot through the ceiling, and now the market is actually pricing in a 50/50 chance that the Fed could actually raise interest rates by year-end. That’s a pretty remarkable reversal in the short term, as far as from where we were to where we are right now, mostly driven by the oil spike.
Brandy Auterson-Hurst:
Okay, so what’s the takeaway for viewers at home?
David Nelson:
Well, I think it basically comes back to, the shift that we’ve seen can certainly catch people off guard if you don’t have a solid plan put together in advance, not making irrational decisions at the last minute.
Brandy Auterson-Hurst:
All right, David. Thanks for joining us today.
David Nelson:
Thank you.
Brandy Auterson-Hurst:
If you missed any of our discussion, we’ll make it available for you on OurQuadCities.com.
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