• About Us
  • Privacy Policy
  • Contact
Mortgage Insurance Center
  • Home
  • Mortgages
  • Health Insurance
  • Home Insurance
  • Life insuranace
  • Finance Laws
    • Banking Laws
    • Assets
    • Interest Rate
    • Loans
No Result
View All Result
  • Home
  • Mortgages
  • Health Insurance
  • Home Insurance
  • Life insuranace
  • Finance Laws
    • Banking Laws
    • Assets
    • Interest Rate
    • Loans
No Result
View All Result
Mortgage Insurance Center
No Result
View All Result
Home Interest Rate

VIEWPOINT: Raising interest rates will help fight inflation

by Matthew Upton
May 13, 2022
in Interest Rate
0
0
SHARES
1
VIEWS
Share on FacebookShare on Twitter

[ad_1]

April was a volatile month, from the combination of interest rate expectations, persistent inflation and the continued escalation in Ukraine. The Federal Reserve has already raised interest rates, and we’re staring down more potential hikes coming with the upcoming meetings – some at even double the current pace.

Andrew Rosen | PHOTO COURTESY OF DIVERSIFIED LLC

While expectations are for inflation to peak soon, the Fed has seemed committed to reducing inflation at the expense of gross domestic product (GDP) growth. Given that GDP was negative for the first quarter, there is now a concern over GDP growth as rates rise. We don’t expect a recession in 2022, but concerns have certainly risen. 

During the month of April, the 10-year Treasury bond yield rose from 2.32% up to 2.88%. For perspective, that yield was around 1.5% coming into the year and at 1.2% as recently as August of last year. The rapid change in expectations for interest rates has been a huge factor in markets as interest rates do influence asset prices.

Tech stocks have been trending lower – they were running high during the pandemic but in April we’ve seen traders shift away from big tech stocks into less risky ventures. April was the worst month for the NASDAQ, at -13%, since October 2008.

A lot of the reason comes down to the market’s concern over the Federal Reserve’s actions. Market prices indicate an expectation that interest rates will move up sizably in 2022 to fight inflation. Longer duration stocks, which are companies whose earnings are expected further into the future, are disproportionately hurt by this. Many technology companies, which come with higher growth expectations, fall into this category.

The market has rotated from high-growth sectors to more stable, defensive sectors like utilities and staples to go with energy (given the rise in energy prices). This makes sense given rising rates and volatility concerns, but one case for growth-oriented sectors like technology is that investors will search for growth as the economy slows. As these tech companies become more and more attractive from a valuation perspective, those arguments get even stronger.

Amazon also saw its first quarterly loss since 2015 with a decline of 14.2%, sparking some concerns of consumer spending decreasing. We also saw Netflix fall 49% in April, another indicator that the elevated valuations of tech stocks are looking less attractive in a rising rate environment.

These ups and downs in the market are expected as the market adjusts to the Fed increasing the interest rate. At Diversified we also recommend investing not for the short term but for the long term.

A lot of what we’ve seen has been a short-term repricing in markets and we need to keep our focus long-term. The market has priced in an aggressive Fed and a more pessimistic view, so we view the path forward in a more positive light. The concern is that risks have risen, as the Fed is now raising rates at a time when global growth is slowing, and assets are expensive. We still see respectable earnings reports and a strong labor market, but much will depend on inflation and how markets absorb rising rates.

Andrew Rosen is president of Diversified LLC, a Wilmington-based financial planning & investment management firm.

[ad_2]

Source link

Previous Post

[GRTV] AIA rolls out direct life insurance plans

Next Post

Angel Oak Mortgage, Inc. (AOMR) Q1 2022 Earnings Call Transcript

Next Post

Angel Oak Mortgage, Inc. (AOMR) Q1 2022 Earnings Call Transcript

Popular Posts

Ajanta Pharma : Newspaper Advertisements
Life insuranace

Taiming Assurance Broker : Announcement on behalf of the major subsidiary Link-Aim Life Insurance Broker Co.,LTD. to distribute dividends.

by Matthew Upton
July 28, 2022
0

Close Provided by: TAIMING ASSURANCE BROKER CO.,LTD. SEQ_NO 4 Date of...

Read more

Taiming Assurance Broker : Announcement on behalf of the major subsidiary Link-Aim Life Insurance Broker Co.,LTD. to distribute dividends.

20% interest rate on credit cards! Here’s how to avoid paying those high rates :: WRAL.com

Sens. Murphy, Blumenthal, Colleagues Reintroduce the Behavioral Health Coverage Transparency Act – InsuranceNewsNet

$1 billion in loans still available for agricultural funding in Ohio

How Long Do Car Accidents Stay on Your Record?

Rocket Mortgage Classic Wagers: Pick To Finish Top-10

Load More

Popular Posts

Ajanta Pharma : Newspaper Advertisements

Taiming Assurance Broker : Announcement on behalf of the major subsidiary Link-Aim Life Insurance Broker Co.,LTD. to distribute dividends.

by Matthew Upton
July 28, 2022
0

Hingham DPW Workers Deserve Respect, Decent Wages and Affordable Health Insurance

Hingham DPW Workers Deserve Respect, Decent Wages and Affordable Health Insurance

by Matthew Upton
July 5, 2022
0

Propy introduces blockchain title and escrow service

Propy introduces blockchain title and escrow service

by Matthew Upton
May 26, 2022
0

Ajanta Pharma : Newspaper Advertisements

Taiming Assurance Broker : Announcement on behalf of the major subsidiary Link-Aim Life Insurance Broker Co.,LTD. to distribute dividends.

July 28, 2022

20% interest rate on credit cards! Here’s how to avoid paying those high rates :: WRAL.com

July 28, 2022
Edelweiss General Insurance launches India’s first on-demand, mobile telematics-based comprehensive motor insurance – SWITCH

Sens. Murphy, Blumenthal, Colleagues Reintroduce the Behavioral Health Coverage Transparency Act – InsuranceNewsNet

July 28, 2022

Categories

  • Assets
  • Banking Laws
  • Finance Laws
  • Health Insurance
  • Home Insurance
  • Interest Rate
  • Life insuranace
  • Loans
  • Mortgages

Tags

home loans mortgage personal loan
  • Privacy Policy
  • contact us

© 2023 JNews - Premium WordPress news & magazine theme by Jegtheme.

No Result
View All Result
  • About Us
  • contact us
  • Home
  • Home 2
  • Home 3
  • Privacy Policy

© 2023 JNews - Premium WordPress news & magazine theme by Jegtheme.