Zacks Investment Management

Markets remain resilient even as the economic outlook continues to evolve. In this issue of Steady Investor, we take a closer look at several developments shaping the investment landscape, including:

• How rising yields affect consumers
• SEC scrutiny of pre-IPO funds
• What’s really driving the economy

Should U.S. Consumers Be Worried About Rising Treasury Yields? Readers have likely seen the stories all over the financial media and elsewhere—U.S. Treasury bond yields are on the rise. But rising bond yields are not just a Treasury market story. They can affect borrowing costs across the economy, from mortgages and auto loans to corporate debt and stock valuations.

Let’s focus on mortgage rates as one example. Because mortgage borrowing rates are closely tied to the 10-year Treasury yield, higher bond yields could push the 30-year fixed mortgage rate closer to 7%. Freddie Mac said the average rate was already 6.66% last week, another challenge for a housing market that has struggled with affordability for several years. Auto loans are also exposed. Car financing costs are tied more closely to medium-term Treasury yields, and the five-year yield recently reached its highest level since January 2025.¹

Markets Have Been Resilient. Is Your Strategy Ready for What’s Next?

From rising borrowing costs to shifting expectations for the economy and markets, investors have plenty of reasons to feel uncertain about what comes next. But uncertainty doesn’t have to mean changing course.

Our free guide, Navigating Market Volatility³, offers four principles for staying disciplined when markets become unpredictable. Download your free copy today to learn more about:

• Sharp market declines and corrections are a normal part of investing
• The best market days come unexpectedly (often within days or weeks of the worst days)
• Trying to pick market tops and bottoms is nearly impossible
• Trust your strategy and discipline, not the headlines
• Plus, more insights and assistance to help you keep your investment strategy on course

If you have $500,000 or more to invest, get your free volatility guide today!

Download Your Free Copy Today: Navigating Market Volatility: 4 Principles for Staying the Course³

These pressures can affect spending at the margins. But it is also important to keep the move in perspective. Treasury yields are elevated relative to the ultra-low-rate years, but they are not unusually high by longer-term historical standards. The other side of the story, too, is that a steeper yield curve can improve the economics of bank lending, since banks often borrow short and lend long. It can also signal that markets see stronger growth ahead, not just higher inflation risk.

Private Funds That Offer “Early Access to IPOs” Come Under Scrutiny – The SEC is taking a closer look at investment vehicles that claim to offer exposure to shares of high-profile private companies. The focus is on special purpose vehicles, or SPVs, which are often marketed as a way for investors to gain exposure to fast-growing startups before they go public. According to recent reporting, SEC examiners have been asking registered investment advisers to prove that their SPVs actually own, or have legitimate exposure to, the private-company shares they claim to offer.One recent example illustrates the issue. An SPV fund reportedly marketed pre-IPO exposure to SpaceX, but later told investors the shares had been sold before the company began trading. That meant investors did not receive the full benefit they may have expected from owning exposure through the IPO event.This highlights the broader risk to the notoriously opaque private markets—some SPVs own shares directly, while others invest through layered or indirect structures. That can make it harder to understand ownership, fees, liquidity, and exit timing.Public markets can be volatile, sure, but they also generally offer clearer pricing, stronger disclosure, and daily liquidity. That should matter more to investors than trying to hit a home run and score outsized, short-term returns.⁴

The Alphabet Soup of the U.S. Economy – Ask any economist how the U.S. economy is currently holding up, and the response is likely to be a letter of the alphabet. The debate is arguably getting too silly to follow. For years, the popular label was “K-shaped,” meaning higher-income households were pulling away while lower-income households struggled. More recently, some have argued the economy is becoming “C-shaped,” with lower- and middle-income consumers gaining ground, while the wealthy’s gains are tapered. Others say “E-shaped” is more accurate, with different income groups moving on separate but relatively stable tracks.There is some data behind the debate. Some measures show the spending gap between income groups narrowing, and some companies have reported improvement among middle-income customers.The problem is that the labels may make the economy sound more precise than it really is. Different households are experiencing this economy differently, especially with housing, borrowing costs, gas prices, and everyday expenses still elevated. But that has almost always been true.For investors, the bigger question is not whether the economy looks like a K, C, or E. It is whether consumer spending, business investment, employment, and corporate earnings remain strong enough to support the expansion. For now, we think the answer is yes.⁵

Is Your Investment Strategy Ready for Changing Markets? Market conditions can shift quickly, making it difficult to know which developments deserve your attention. Rather than reacting to every change, investors can benefit from a strategy designed to stay on course through different market environments.

Our free guide, Navigating Market Volatility⁶, outlines four principles to help investors manage uncertainty, avoid common mistakes, and stay focused on their long-term goals. Inside, you’ll learn:

• Sharp market declines and corrections are a normal part of investing
• The best market days come unexpectedly (often within days or weeks of the worst days)
• Trying to pick market tops and bottoms is nearly impossible
• Trust your strategy and discipline, not the headlines
• Plus, more insights and assistance to help you keep your investment strategy on course

If you have $500,000 or more to invest, access your free volatility guide today.

Disclosure