Brandy Auterson:
It’s now time for 4 Your Money. We’re joined by David Nelson, CEO of Nelson Corp Wealth Management. Welcome back, David.
David Nelson:
Thank you, Brandy.
Brandy Auterson:
We have heard a lot this year about rising inflation and the Federal Reserve raising interest rates. How have those dynamics been playing out in the financial markets?
David Nelson:
Well, clearly, plenty of volatility this year. We’ve had a lot of moves as far as one, two, 3%, as far as year-to-date. While the attention has been basically focused on the stock market and the geopolitical, a little tension has been given as far as to the so-called safe haven of government bonds.
David Nelson:
The chart that I wanted folks to look at here, I think, is going to give a really nice visual as far as what we’re talking about. And that is, I think, people would be surprised to know that this is the worst bond market that we’ve ever seen. In addition to that, the Bloomberg Treasury Bond Index which is the top blue is showing as far as the index over a period of time where the red is looking at the actual returns as far as what they’ve yielded or not yielded. We’re running at two years now, as far as where it looks like we’re going to set a record for all time lows, as far as returns, as far as on bonds. We’re down 9% from the peak in 2020.
Brandy Auterson:
So is there anything investors can do to address some of these issues?
David Nelson:
Well, I think they need to be careful as far as the type of bonds that they own. If they’re going to own bonds, you’d clearly want to be our opinion, as far as on the short end, the short end meaning bonds, that aren’t long maturity. When we look at performance, the declines that we’ve seen in the bond market are basically rival in the negative returns that we’ve seen as far as in the stock market. This is extremely rare. People need to look at the options that exist out there. Commodities in real estate may be something to consider.
Brandy Auterson:
If you missed any of our discussion, we’ll make it available for you on ourquadcities.com.