PEEK OF THE WEEK
December 5, 2016
Leif Hagen & Donna Roberts
The Markets
Flirting
with higher interest rates.
Last week, yields on 10-year
Treasury bonds rose to a 17-month high of 2.44 percent, reported The Wall Street Journal, before
retreating to finish the week at about 2.4 percent.
As we’ve mentioned previously,
some experts suspect the bull market in bonds, which has persisted for more
than 30 years, may be headed into bear territory. In part, this is because the
U.S. Federal Reserve is expected to increase the fed funds rate in December.
Last week, CME’s FedWatch Tool indicated there was almost a 99 percent chance the
Fed would raise rates in December. Bond yields often reflect the actions of the
Fed. If interest rates rise, bond prices move lower, resulting in a higher bond
yields.
Another issue affecting interest
rates is inflation. For several years, low inflation has supported the “trend
within markets…to invest in rate-sensitive investments like bonds, which benefit
from low inflation, and their equity surrogates which benefit from falling bond
yields,” wrote Schroders.
In recent weeks, the bond market
has been influenced by inflation prospects. The
Wall Street Journal explained:
“Worries about higher inflation have
been a main factor fueling one of the biggest bond market selloffs since the
crisis over the past weeks. The selloff had accelerated after the U.S. election
in early November. Investors then had bet that the prospect of expansive fiscal
and economy policy from the new U.S. administration would lead to stronger
growth and higher inflation.”
Last week, a measure of wage
inflation moved slightly lower. This appears to have assuaged some investors’
concerns about inflation as bond yields moved lower on Friday.
Data as of 12/2/16
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500
(Domestic Stocks)
|
-1.0%
|
7.2%
|
5.4%
|
6.8%
|
12.0%
|
4.5%
|
|
Dow Jones Global ex-U.S.
|
-0.1
|
-0.7
|
-3.0
|
-3.8
|
1.9
|
-1.3
|
|
10-year Treasury Note (Yield
Only)
|
2.4
|
NA
|
2.2
|
2.8
|
2.0
|
4.4
|
|
Gold (per ounce)
|
-1.2
|
10.5
|
11.2
|
-1.5
|
-7.7
|
6.2
|
|
Bloomberg Commodity Index
|
2.4
|
10.8
|
8.3
|
-11.1
|
-9.9
|
-6.6
|
|
DJ Equity All REIT Total
Return Index
|
-0.6
|
3.7
|
5.8
|
11.4
|
12.1
|
4.3
|
S&P 500, Dow Jones Global ex-US, Gold, Bloomberg
Commodity Index returns exclude reinvested dividends (gold does not pay a
dividend) and the three-, five-, and 10-year returns are annualized; the DJ
Equity All REIT Total Return Index does include reinvested dividends and the
three-, five-, and 10-year returns are annualized; and the 10-year Treasury
Note is simply the yield at the close of the day on each of the historical time
periods.
Sources: Yahoo! Finance, Barron’s, djindexes.com,
London Bullion Market Association.
Past performance is no guarantee of future results.
Indices are unmanaged and cannot be invested into directly. N/A means not
applicable.
growth, growth,
where’s the growth? It’s that time of the year again: The time when
pundits and analysts assess the present and forecast the future. Here are a few
predictions from The World in 2017,
which is published by The Economist:
·
Forecasts suggest
the United States will not be among the fastest growing economies in the world
during 2017. The top ten
countries for economic growth are expected to be: 1) Yemen, 2) Myanmar,
3) Côte d’Ivoire, 4) Mongolia, 5) Laos, 6)
Ghana, 6) India, 8) Cambodia, 9) Bhutan, and 10) Djibouti.
·
One
country’s cinema box office gross may surpass that of the United States. Fifteen
cinema screens are being added every day in China. During 2017, the box office revenue
in the country is estimated to be $10.3 billion, higher than that of the United
States.
·
Automobile
companies are revving their engines. Did you know there are just 21 cars
per 1,000 people in India? In China, the ratio is about 120 per 1,000. That means
there is a lot of room for growth – or alternative forms of transportation.
·
Artificial
intelligence (AI) may create new ethical dilemmas. “Look at ‘medtech.’ Fans
claim AI will remake health care, using algorithms to do the grunt work of
diagnostics. Yet, could a virtual doctor explain its thinking so patients can
make informed decisions?”
·
The
sharing economy grows to encompass jets and yachts. Apparently, a bunch of
Asian millionaires are interested in private aircraft. Some in the tourism
industry are hoping they’ll be willing to share.
We hope 2017
will be filled with pleasing discoveries, stimulating events, and thrilling
innovation.
Weekly Focus – Think About It
“Happiness is having a large,
loving, caring, close-knit family in another city.”
--George Burns, American
comedian
Warm regards from Eagan,
Leif M. Hagen
Leif M. Hagen, CLU, ChFC
LP Financial Advisor
Securities offered through LPL Financial Inc., Member FINRA/SIPC.
P.S. Please feel free to forward this commentary
to family, friends, or colleagues.
P.S.S. Also,
please remind your friends and family members becoming Medicare eligible that
we offer Medicare insurance and Part D options with NO COST to work with Leif as
their agent
For more information and resources visit our website at www.HagenFN.com
For more information and resources visit our website at www.HagenFN.com
For Medicare supplement and part D information and
resources, please visit MEDICAREforSENIORS.info
Please FOLLOW and “LIKE US” on FACEBOOK.com/HagenFN
Please Read our Blog @ http://HagenFinancialNetwork.blogspot.com
Please Follow our Tweets on Twitter.com/SafeLeif
Check out this: http://www.MedicareForSeniors.info
* This newsletter was
prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with
the named broker/dealer.
* The Standard & Poor's
500 (S&P 500) is an unmanaged group of securities considered to be
representative of the stock
market in general. You cannot invest directly in this index.
* The Standard & Poor’s
500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect
fees,
expenses, or sales charges.
Index performance is not indicative of the performance of any investment.
* The 10-year Treasury Note
represents debt owed by the United States Treasury to the public. Since the
U.S.
Government is seen as a
risk-free borrower, investors use the 10-year Treasury Note as a benchmark for
the long-term bond market.
* Gold represents the
afternoon gold price as reported by the London Bullion Market Association.
The gold price is set twice
daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in
U.S. dollars per fine troy ounce.
* The Bloomberg Commodity
Index is designed to be a highly liquid and diversified benchmark for the
commodity futures market. The Index is composed of futures contracts on 19
physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT
Total Return Index measures the total return performance of the equity
subcategory of the Real Estate Investment Trust (REIT) industry as calculated
by Dow Jones.
* Yahoo! Finance is the
source for any reference to the performance of an index between two specific
periods.
* Opinions expressed are
subject to change without notice and are not intended as investment advice or
to predict future performance.
* Economic forecasts set
forth may not develop as predicted and there can be no guarantee that
strategies promoted will be successful.
* Past performance does not
guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly
in an index.
* Consult your financial
professional before making any investment decision.
* Stock investing involves
risk including loss of principal.
* To unsubscribe from the
“Peek of the Week”, please reply to this email with “Unsubscribe” in the
subject line, or write us at: Hagen Financial Network, Inc. 4640 Nicols Road,
Suite 203; Eagan, MN 55122.
Sources:
http://www.wsj.com/articles/u-s-government-bonds-strengthen-on-jobs-data-1480688967 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/12-05-16_WSJ-US_10-Year_Bond_Yield_Falls_from_17-Month_High_as_Bond_Rout_Stalls-Footnote_1.pdf)
http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
(or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/12-05-16_CME_Group-Countdown_to_the_FOMC-Footnote_3.pdf)
The Economist, “World in 2017”, https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/12-05-16_TheEconomist-The_World_in_2017-Footnote_5.pdf
#financialadvisorEaganMN
#financialplannerEaganMN #wealthmanagementEaganMN
#hagenfinancialnetwork
