March 2021
Market Update

“March comes in like a lion and goes out like a lamb”…. Or the opposite!  It is a very old expression meant to imply the variability of weather in the month of March as temperatures and precipitation can go either way, and sometimes violently.  It is a good analogy for what we expect to see in markets this month with volatility on the rise.  We are due for some of that “weather”.

It will be a year this month from the start of the pandemic.  We all know, in living color now, how that has played out from the stomach-churning drop in markets to the amazing recovery thanks to trillions of dollars from stimulus and Federal Reserve support.  In spite of the chaos in Washington for most of January, markets shrugged off these events and pushed steadily higher on the strong earnings results for most companies and the promise of more stimulus.

So what happened at the end of February that has woken the lion (bear?) and stirred volatility? 

The yield on the 10-year treasury spiked from 1.11% to 1.52%, a jump of over 30% in just one month.  What exactly does that mean and why did it cause stocks to waffle?  The yield on the 10-year treasury is determined based on demand at the bond auctions.  If there is high demand then yields go down; if there is less demand, then yields go up. It is the 10-year treasury that determines your mortgage rate, so yields going up is not positive for new mortgages.   The reason for yields spiking higher right now may point to concern over inflation and the future value of the dollar, so yields moving higher can also be problematic for stocks.

Chairman of the Federal Reserve, Jerome Powell, came out last week and stated that this spike does not concern him as he felt it was ‘transitory’ or temporary.  It is also true that the Federal Reserve has other tools in their toolbox to help dampen yields if they continue to spike higher, much like we saw them employ following the financial crisis.  Nevertheless, we will continue to monitor the situation to see whether this remains a temporary issue or symptomatic of a larger problem.

In your portfolios here, the sudden rise in bond yields squeezed us out of our longer-maturity bonds and into cash for the moment.  Stocks have had a bumpy last few weeks, but so far the longer term up-trend is still in place and we have remained invested in all of the stock portfolios. 

The fact of the matter is … there is not a better alternative than stocks right now!

Three administrative items to bring to your attention:  normally at this time of year we are taking reservations for the spring training games.  They will, in fact, be hosting spring training games in Arizona, albeit on a modified schedule and with limited attendance.  It was with great regret that we made the decision to forego hosting our annual event out of an abundance of caution; we are so close to getting back to a degree of normal but we don’t wish to let our guard down and put anyone at risk.  We promise to be back bigger and better at next year’s event!

We would also like to draw your attention to a new segment on our website this month.  With the new administration, a number of topics are gathering airtime and, as some of these impact financial planning matters, we thought we would occasionally write an “Op Ed” piece on some of these topics to share our thoughts with you.  This month we tackle the topic of student loan debt and where that may be headed and you can link directly to this editorial here: CLICK HERE.

And lastly, you may hear a new voice on the phones this week.  Lauren Haefner is joining Amy in the front office to help with the whole myriad of things that Amy does to take care of you.  She comes to us with a background in the financial services field and we think she is going to make a great addition to your team so please help us to welcome her!

If you have questions, please contact us.

FINANCIAL PLANNING
COLLEGE AND TAX PLANNING
401(K) ALLOCATION
GRAPHIC OF THE MONTH

To download the March 2021 Newsletter: CLICK HERE