Remember that saying in school that you could yell back at the bully on the playground at recess…

“Sticks and stones can break my bones but words will never hurt me…”

This may be well meaning but grossly inaccurate. Words can have a tremendous impact.

In last week’s newsletter, I urged you to watch the Federal Reserve Chairman, Jerome Powell, like a kid with a firecracker and a lighter.

This past Wednesday the Fed chair gave an update stating that they are trying to keep rates steady and then possibly three rate cuts in 2024.

Before the market closed that day the 2 year treasury bonds dropped by approx. 6.5%

Look at the chart below.

Now that’s power.

While this could create downward pressure in interest rates, there are some ramifications to be very aware of.

• Savings, money market and CD yields decreasing
• Bonds at higher yields could be called before their maturity date and replaced with lower yielding bonds (explained by Troy Ragan in “The Retirement Deception”)
• More volatility in the markets – money searching for returns and going from bonds to equities potentially pumping and dumping on their way.
• Changes in market liquidity leading toward market corrections or crashes

If you look at this chart it is the 10 year government bond rate minus the 2 year government bond rate. It is a well known indicator that after this inverts (i.e. below the 0% blue line) that at a short time after there is either a market correction, crash or recession.

Zoom in on the graph and look at the dates after the chart goes below the blue line and as it starts to come back close to 0.00% (the blue line) is where we have had major market turmoil

• Early 1990’s recession
• Dot Com Crash in 2000
• Great Financial Crisis in 2008
• Now look at where we are… much more inverted but starting to head back to 0.00% 😱

So the real question is are you ready for these potential market ramifications?

If you are feeling uncertain or need some clarification, just reach out to us and see if we can fit you onto your calendar. We are trying to help as many people as we can prepare for what’s coming.