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So Much For The Federal Reserve Lowering Rates

by Fortem Financial January 13, 2025

Looks like this was just primping from the Fed in an election year and now we need to deal with reality. The bond market is always right, and it is indicating that rates are probably not going lower, and inflation is probably not in our rearview mirror.

Lower returns in the year ahead seem inevitable, especially given already rich equity valuations and prospects for higher bond yields. Inflation will prove stickier and higher than central banks and markets are forecasting. That implies that central banks will cut rates by less than markets are discounting, with some possibility that the Fed could be forced to hike interest rates by the end of this year.

The crosscurrents of ongoing economic expansion and higher bond yields signal that equity markers will be choppy in 2025. Rising earnings will provide underlying support, but expensive U.S. stocks are especially vulnerable to a further increase in U.S. Treasury yields.

While we expect president-elect Trump to emphasize growth over disruption, his expected daily social media commentary will inevitably create periodic capital market volatility. Geopolitics is also a wildcard, with the prospect of a halt to the Ukraine and Middle East wars potential positives, while tensions between China and U.S. are at risk of intensifying.

Source: Bob Doll, CEO, Crossmark Investments

 

Market and Index Changes for the Week Ending 1/10/2025

Chart reflects price changes, not total return. Because it does not include dividends or splits, it should not be used to benchmark performance of specific investments. Data provided by Refinitiv.

 

Sincerely,

Fortem Financial
(760) 206-8500
team@fortemfin.com

 

 

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Brian Amidei, along with Partners Joseph Romano and Brett D'Orlando have also been named *2014, 2015, 2016, 2017, 2018 Five Star Wealth Managers!

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The Five Star Wealth Manager award is based on 10 eligibility and evaluation criteria: 1) Credentialed as an investment advisory representative (IAR) or a registered investment advisor; 2) Actively employed as a credentialed professional in the financial services industry for a minimum of five years; 3) Favorable regulatory and complaint history review; 4) Fulfilled their firm review based on internal firm standards; 5) Accepting new clients; 6) One-year client retention rate; 7) Five-year client retention rate; 8) Non-institutionalized discretionary and/or non-discretionary client assets administered; 9) Number of client households served; and 10) Educational and professional designations. The inclusion of a wealth manager on the Five Star Wealth Manager list should not be construed as an endorsement of the wealth manager by Five Star Professional or the magazine. The award methodology does not evaluate the quality of services provided. Additional information about this award is available at: fivestarprofessional.com/2016FiveStarWealthManagerMethodology.pdf
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Data Sources: News items are based on reports from multiple commonly available international news sources (i.e. wire services) and are independently verified when necessary with secondary sources such as government agencies, corporate press releases, or trade organizations. Market Data: Based on reported data in WSJ Market Data Center (indexes); U.S. Treasury (Treasury Yields); U.S. Energy Information Administration/Bloomberg.com Market Data (oil spot price, WTI Cushing, OK); www.goldprice.org (spot gold/silver); Oanda/FX Street (currency exchange rates). All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness.

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The Dow Jones Industrial Average (DJIA) is a price-weighted index composed of 30 widely traded blue-chip U.S. common stocks. The S&P 500 is a market-cap weighted index composed of the common stocks of 500 leading companies in leading industries of the U.S. economy. The NASDAQ Composite Index is a market-value weighted index of all common stocks listed on the NASDAQ stock exchange. The Russell 2000 is a market-cap weighed index composed of 2,000 U.S. small-cap common stocks. The Global Dow is an equally weighted index of 150 widely traded blue-chip common stocks worldwide. Market indices listed are unmanaged and are not available for direct investment.

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