Rates As Of August 1, 2022
As Dean Poling - an editor with the Valdosta Daily Times, Georgia - said, "Summer days last forever but end too fast". As the summer comes to an end, it is time to get back into a routine and tackle the challenges and opportunities the tail end of the year present.
In June, shortly after the announcement of the rate increase of 75 basis points by the Fed, the 10-year yield rose sharply, peaking at 3.49%. Fast forward a month, and despite a second increase of 75 basis points at the end of July, the 10-year yield continues its descent, now down to 2.60% - its lowest since early April. The Fed has now raised the benchmark rate by a total of 225 basis points this year. These are the largest back-to-back cumulative rate jumps issued by the Fed since then-chair Paul Volcker wielded rate hikes to combat rampant inflation in the early 1980s. And the rate has now reached the level it peaked at the last time the Fed was proactive in tightening policy, from 2015 to 2018.
Despite the strong numbers in job creation for the first half of 2022 and decreasing unemployment rate currently at 3.60%, fear of a volatile market, still brings out uncertainty. A lesson from previous market corrections is that periods of panic and uncertainty can provide the best opportunities for longer-term investors and those who prepare for what could potentially happen.
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