Investment committees around the world are now in the process of repositioning portfolios for the new rate cycle. Individual investors, may also be rethinking their allocations on their investment and retirement accounts. One of the key points is what to do with the cash. T-bills have been an attractive investment for almost 2 years. But if we follow the path for rates the Fed has communicated, the 4-5% rate will no longer be available. Furthermore, if the Chinese situation deteriorates even more, which seems likely, additional aggressive actions on rates may be needed. In the chart below, we can see the cause effect relationship between retail money market assets and 12 month yields increase or decrease. As you can see, we may have 400 bps of rate cuts in front of us, and if that materializes, 40 years of history tell us that money market assets wil decrease accordingly. Is that money going to be invested in equities or fixed Income? Or will it be used to cover income shortfalls if there is a recession?
Want to know more? join Fund@mental here https://www.myfundamental.net
#iamfundamental #soyfundamental #wealthmanagement #familyoffice #financialadvisor #financialplanning
Comments