As we finished the Third Quarter of 2024, the next part of this most interesting economic cycle commenced. While we were able to stay away from the interest rate discussion in the Newsletter, completely, it was not easy.
So here is an update on the interest rate topic and how it may affect this part of the cycle.
Very near the end of the quarter the Federal Reserve led by Jerome Powell and their group the FOMC (Federal Open Market committee), lowered short term interest rates, think checking or money market overnight rates by .50 percent or in Wall Street lingo 50 basis points. This lowering was greeted with cheers, and we even wrote about it on our blog at Street-cents, the Federal Reserve threading the needle. Fast forward to today, only a very short period of time from the lowered rate, and we received some positive economic data, in the form of employment hiring, which is overall good for the economy but does create a cross current for the Federal Reserve. After this greater than expected economic report, the smartest guys in the room also known as the bond guys, immediately took note and pushed rates both shorter in the form of the 2 year and longer in the form of the 10-year treasury up dramatically. One of our main research providers also expects a much higher than estimated CPI (consumer price index) reading later in the final quarter. Bottom line not a fun time to be a Federal Reserve official, and also a time to be very focused on longer term interest rates such as mortgage rates.
Did we mention it is an election year?
Our lead story in the Q 4 2024 Newsletter had been intended on historical examples of what election years bring. That information hit the cutting room floor, due to the great interest on the vastly increasing insurance rates mostly in the form of homeowners and automobile and what can be done to keep them in check. We were able to include a high-level thought about the election. The note was in Parting Thoughts and a reminder that economic growth is what turns our investments higher.
As we look forward to talking to you next at the turn of the calendar, we also look forward to riding shotgun with you through this most interesting economic cycle!
Thanks for your time!
Sincerely,
John A. Kvale CFA, CFP
Founder of J.K. Financial, Inc.
A Dallas Texas based fee only
Financial Planning Total Wealth
Management firm.
