FDP Wealth Management

Treasury Yields Drift Higher

Recession talk earlier this year and a belief that the Federal Reserve was nearly finished hiking interest rates kept a lid on longer-term Treasury yields. That’s changed.

Last Thursday, the 10-year Treasury yield closed at 4.30%, according to the U.S. Treasury. It was the highest close since late 2007 (St. Louis Federal Reserve Treasury data).

But why have yields recently lurched higher?

To begin with, the Treasury Department is ramping up debt issuance. In late July, the Treasury revised its net borrowing estimate for the third quarter to $1 trillion, significantly higher than the $733 billion projected in early May, according to Bloomberg News.

Read the full analysis on our website...

Treasury Yields Drift Higher - FDP Treasury Yields Drift Higher - Market Commentary 08/21/2023

Read our SCCA article, College Funding Options - A Quick Primer, to learn about the various plans and strategies that can be used to save for higher education expenses!

mcusercontent.com

Fitch Strips USA of Triple-A Credit Rating

Fitch Ratings downgraded U.S. government debt last week by one notch from its prized top rating of ‘AAA’ to ‘AA+.’ Fitch said its decision “reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden,” and repeated political brinkmanship surrounding the debt ceiling debates.

The decision didn’t come as a surprise since Fitch had warned in May, when lawmakers were battling over the nation’s debt ceiling, that the ‘AAA’ rating was under the microscope.

U.S. debt was last downgraded in 2011 when Standard & Poor’s cut its triple-A rating to ‘AA+.’ Only Moody’s maintains its triple-A rating on U.S. debt.

To some extent, it’s difficult to completely disregard the reasoning behind the downgrade. The federal deficit as a percent of Gross Domestic Product (GDP) has more than tripled over the last 40 years.

Read the full analysis on our website:

Fitch Strips USA of Triple-A Credit Rating - FDP Fitch Strips USA of Triple-A Credit Rating - Market Commentary 08/07/2023

Defying Expectations

Gross Domestic Product (GDP) is a very broad measure of the value of goods and services in the economy over a certain period.

Last week, the U.S. Bureau of Economic Analysis reported that GDP rose at an annual pace of 2.4% in Q2, accelerating from Q1’s 2.0% and topping the forecast of 2.0% (Wall Street Journal).

Sometimes, we analyze the quarterly change and find that one-off factors aided or detracted from the headline number. This time, however, that was not the case.

Read the full analysis on our website...

Defying Expectations - FDP Defying Expectations - Market Commentary 07/31/2023