October 2023
401(k) Allocation

401K Allocation

By: Jake Eggett

There are trades.

This week we’ve witnessed a stunning rise in longer-term Treasury yields (and a drop in prices), with 10- and 30-year Treasury rates nearing 5%.  This has impacted the prices of both stocks and bonds, similarly to what we saw in 2022.  There are real risks to both the markets and the economy as we begin the final three months of the year. But these are largely the same risks that markets have faced throughout 2023 and over that period the economy and markets have remained impressively resilient. The difference between now and earlier this year is the market’s expectations of how long rates will stay elevated. 

Given the current market trend, our models have started reducing risk on the stock side, so you’ll see some slight adjustments to your stock allocation.  On the bond side, we have reduced our exposure to high yield corporates and moved those positions into treasuries that are yielding north of 5%.  The floating rate bank loans have held up relatively well but are starting to be pressured also by the rise in the longer-term rates.  We continue to see attractive yields in the bond positions; however, we believe the key is to remain nimble, so you’ll see some changes to the bond allocation as well.    

As always, if you have any questions about how to rebalance your 401K, we encourage you to reach out to us!

MARKET UPDATE
FINANCIAL PLANNING

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