Stay Informed with Real-Time Market Updates - Your Source for Report Releases, Financial Market Data, and Future Insights. Written by Brad McMillan, CFA®, CAIA, MAI, Managing Principal, Chief Investment Officer & Sam Millette, Director of Fixed Income, at Commonwealth Financial Network®.
As we near an anticipated peak in interest rates, we wanted to provide a snapshot of how the fixed income and stock markets have historically performed in the year following interest rate plateaus.
The chart to the left illustrates that the fixed income and stock markets tend to react favorably. While history is no guarantee of future performance, this is one of the many tools that we use to manage your portfolio.
While high-interest rates may pose challenges for borrowing in areas like real estate and vehicle purchases, there is a silver lining as it creates unique investment opportunities in the investment markets.
Source: Bloomberg, FactSet, Federal Reserve, Robert Shiller, J.P. Asset Management.The 60/40 portfolio is 60% invested in S&P 500 Total Return Index and 40% invested in Bloomberg U.S. Aggregate Total Return Index. The S&P 500 total return figure from the 1984 period was calculated using data from Robert Shiller. The analysis references the month in which the month-end 6-month CD rate peaked during previous rate hiking cycles. CD rate data prior to 2013 are sourced from the Federal Reserve, whereas data from 2013 to 2023 are sourced from Bloomberg. CD subsequent 12-month return calculation assumes reinvestment at the prevailing 6-month rate when the initial CD matures. J.P. Morgan Guide to the Markets - U.S. Data are as of December 31, 2023.
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