Bond Yields are On the\nRise: What Does This Means for Investors? \u2013 <\/strong>Over the last few years, a\ncommon narrative in the bond markets has been that yields are at \u2013 or near \u2013 all-time\nlows. Low yields result in low borrowing costs, attractive mortgage rates, and\nhave arguably provided a boost to the equity markets for investors starved for\nyield. But as you can see in the chart below \u2013 which looks at the 10- and\n30-year U.S. Treasury yields alongside the 5-year forward expected inflation\nrate \u2013 bond yields are on the rise. February will mark the 7th<\/sup> month\nof flat-to-negative returns for long-dated Treasuries.1<\/sup><\/p>\n\n\n\n ______________________________________________________________________________________________<\/sup><\/p>\n\n\n\n Thinking about Retiring Soon? Let\u2019s Help You Make It Happen!<\/a><\/strong> To help you do this, we are offering readers our free guide\nthat provides a step-by-step blueprint to potentially help you build a sound\nretirement portfolio. This guide offers you a checklist of the most\nimportant financial, tax, and investment considerations for new retirees, with\ndetailed explanations to help you prepare for this new stage in your life.<\/p>\n\n\n\n If you have $500,000 or more to invest, get our\nfree guide today!<\/p>\n\n\n\n Download Zacks Guide, Thinking of Retiring Soon? Here are 4 Things to Consider First<\/a>3<\/a><\/sup><\/strong><\/p>\n\n\n\n ______________________________________________________________________________________________<\/sup><\/p>\n\n\n\n So, what\u2019s driving U.S. Treasury bond yields higher? We\nthink a strong economic growth outlook, coupled with the Fed not buying as much\nas promised, are contributing factors. But in our view, the biggest driver is higher inflation expectations<\/em> (blue line\nin the chart). If market participants expect higher inflation down the road,\nthey will want to be compensated more today (in the form of higher yields) for\nlong-dated fixed income products. In this way, higher inflation expectations\npush the 10- and 30-year U.S. Treasury bond yields higher. Higher bond yields\ncould have several implications investors should keep in mind: among them,\npressure on high valuation areas of the stock market, and perhaps a positive\noutcome for companies that benefit from a steeper yield curve. Namely, banks. <\/p>\n\n\n\n Small Caps are\nStrongly Outperforming. Can It Last? <\/strong>Small-caps have been posting robust\nperformance relative to their mid- and large-cap counterparts, with the\noutperformance widening to the biggest margin in over 20 years. Indeed, the\nRussell 2000 Index (small-caps) has climbed some 15% in 2021 alone, setting\nover 10 new closing records as the S&P 500 lags behind. Zooming out over\nthe past six months, small-caps are outperforming the S&P 500 by 30%. The\nquestion is, can it last? Historically, small-caps have done well on a relative\nbasis early in new economic expansions and bull markets. Anticipating strong\ngrowth rebounds benefiting companies with room to grow, investors tend to favor\nsmall-caps early in a cycle because of the belief they could post the strongest\ngrowth rates (and potentially strongest stock returns). Sustained leadership in\nsmall caps shows that investors are \u2018risk-on,\u2019 but also that investors may be\nlooking for trades outside of the \u2018Big Tech\u2019 category where valuations are\nstretched.4<\/sup><\/p>\n\n\n\n Higher Prices,\nEverywhere \u2013 <\/strong>Prices seem to be rising everywhere. The price per barrel of\noil has been climbing steadily higher. Copper is up over +50% over the past\nyear. Freight prices are up over +200%; lumber prices have jumped +117% on the\nheels of a housing boom. The S&P Case-Shiller Home price index is up +9.5%.5<\/sup>\nTo be fair, many of these prices are jumping sharply off lows, so the triple\ndigit price increases are due to low comparisons. But there is another\nconsideration at play here: the trickling effect of higher inflation. Investors\nshould keep a close eye on inflation, because inflation could be the factor\nthat moves the Fed to tighten monetary policy. Recent Fed minutes indicate no\nappetite for tightening any time soon. But it\u2019s also important to remember that\n\u2018tightening\u2019 does not only happen when the Fed raises rates \u2013 there are plenty\nof ways the Fed can take their foot off the gas, such as paring back\nquantitative easing. Each time they do, the equity market is likely to respond\nwith volatility (remember \u201ctaper tantrums?\u201d). \n<\/p>\n\n\n\n Planning Retirement Soon? Here are 4 Steps to\nConsider First<\/strong> \u2013 If you\u2019ve been planning to retire for a while,\nbut are still hesitant of whether this is the right time, here are some steps\nto consider! To guide you through this new phase, we\u2019ve created our new guide\nto help you review your financial and investment situation so you can make any\nadjustments necessary to keep your plans and lifestyle on track. <\/p>\n\n\n\n If you have $500,000 or more to invest and want to\nunderstand your retirement options, get our guide, Thinking of Retiring\nSoon? Here are 4 Things to Consider First.<\/em>6 <\/sup>Simply click on the\nlink below to get your copy today!<\/p>\n","protected":false},"excerpt":{"rendered":" Rising bond yields, higher prices everywhere signal inflation ahead, small cap surge shows investor risk appetite<\/p>\n","protected":false},"author":3,"featured_media":7426,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73],"tags":[],"class_list":["post-9368","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-private-client-group","category-steady-investors-week"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9368","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=9368"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9368\/revisions"}],"predecessor-version":[{"id":10442,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/9368\/revisions\/10442"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=9368"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=9368"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=9368"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/02\/4_pic1-5-1024x395.png\")
<\/a>
When retiring, you should feel as confident and assured as possible. Yet, for many investors, witnessing the day-to-day highs and lows of the market can cause anxiety and bring up concerns for the future, especially for those who are building a retirement portfolio. While apprehensions about the future are normal, making a detailed plan for retirement can help alleviate this anxiety and help you to retire with peace of mind. <\/p>\n\n\n\n