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CIP Quips

Running out of Patience

What’s in the News: 

Last Thursday, the 10 year Treasury note hit 2.03%, its lowest point of the year. With Fall just around the corner, we are reminded that the Fed is supposed to be on a path of normalizing interest rates, a fact difficult to grasp since the 10 year US Treasury note is at the same level it was in November of last year. While US 2Q GDP was revised higher, manufacturing and consumer sentiment are at yearly highs, and we are seeing synchronized global expansion, Central Banks continue their accommodative monetary policies as our economy is missing one thing: inflation.  

Although many Fed officials think inflation will eventually rise, low employment and potential economic weakness due to hurricanes Harvey and Irma could cause the Fed to pause on their previous plans. 


Probability of Interest Rate Activity at September 20, 2017 FOMC Meeting

1/3/2017 -  9/8/2017

Source: Bloomberg


What are we thinking?

Retirees can’t afford to wait on the sideline for rates to rise.  According to a study by Wells Fargo, 59% of Americans are more concerned about avoiding loss than maximizing the growth of their retirement investments - which the study labels as ultimately "too conservative". The Fed may be the only ones in a position to remain patient – but a risk-managed fixed income strategy such as CIP could be a strong option for your clients.  



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