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Mosaic Weekly Article 4.14.2022

April 18, 2022

Wondering why this update is coming on a Thursday this week? The financial markets along with our office will be closed tomorrow in observance of the Good Friday and Easter holidays. Let me start by wishing you and your loved ones a very Happy Easter! I hope you are once again able to come together with family and friends on this joyous weekend.

Now, on to the good stuff, maybe? This morning, New York Federal Reserve President John Williams openly discussed on Bloomberg television that a half-point increase in interest rates during the May meeting is a very “reasonable option” on the table. His statement further fuels the speculative fire that we could be in for not only one but two such increases in the coming months. The news itself is not shocking and only echoes similar comments from other committee members. What is of interest to me, however, is that several members have now openly discussed this possibility. What we do know is that our financial markets love clarity and perhaps this strategy of openly discussing the options at hand now, allows the markets to digest and settle in ahead of time.

The CPI (Consumer Price Index) rose +8.5% in March, the fastest annual gain since December 1981. The surging prices in food, energy, and shelter attributed to the rapid increase. These elevated numbers were within the range of estimates and the markets traded relatively sideways on the news. Within the broader CPI number, the so-called core CPI numbers (less food and energy) were flat at 6.5% and starting to show signs of moderating. It is believed that the March numbers may indeed prove to be the “high” in the near-term and watchful eyes will be looking for further evidence in the April data.

An Easter present: Back at the end of 2021, we mentioned that I-Bonds, or inflation protected bonds, would be a good place to “park” excess funds in the near-term versus simply holding them at the bank. Recall that there are yearly limitations of $10k per person (calendar year) and that these purchases can be made directly through the Treasury Direct website. Currently these bonds offer a 7.12% annual return through April, but now the rate could go as high as an estimated 9.62% in May based on this latest CPI data. We won't know for sure until May 2nd, when the Department of Treasury announces the new rates. This could present an appealing opportunity in the coming weeks. Keep in mind that in order to obtain the full dividend, these monies would need to be held for the entire year. This article's URL is shown below. Keep an eye out!

Have a wonderful weekend!´╗┐