The markets finished higher for a second consecutive week after several days of mixed trading. The technology heavy Nasdaq Index is still off quite a bit for the year but has started to show signs of recovering. Energy and oil volatility continues to play out as the war in Ukraine remains unsettled and prolonged. Here in Maryland, we were “rewarded” with a month-long moratorium on the state-based taxes on gasoline that could be expanded into the summer. It appears that certain other states may also follow suit to provide some relief for consumers. There have been rumblings out of Washington about a potential stimulus check to help individuals through this spike in fuel prices, but it is hard to tell at this point if it is gaining any real traction. I suspect that these concerns will be dealt with on a state-by-state basis as opposed to the Federal level. If these issues persist into late spring and early summer, travel costs overall could pose a problem for many who have been anxious to get out and about.
There is an increasing likelihood that the Federal Reserve will raise interest rates by a half-point at their next meeting in May. This is a departure from their initial strategy, but it demonstrates the urgency with which inflation must be brought under control. As a result of this news, 10-year treasury yields have surged much higher this week, reinforcing the need to intervene on short-term interest rates. The financial markets, on the other hand, appear to have shrugged off these headlines and have proceeded to regain some of the year-to-date losses. It seems logical to assume that the trickle-down effect will occur swiftly in other areas of the economy. Indeed, news headlines on the tape late Friday afternoon stated that 30-year mortgage rates have quickly risen to nearly 5%, a significant increase from just a few months ago. Demand for new mortgages is also declining while refinance demand has virtually dried up. The anticipated "spring housing market” might become very intriguing, with home inventory remaining at historically low levels and rates now on the rise. Perspective is important, and even though 30-year rates have risen to 5%, they are still below historic and long-term averages. We just have to accept that the days of borrowing cheap money are over, and that, barring any major economic downturns, we are entering the next chapter.
As always, we have a lot to think about, and as has been the case over the past several years, information is flowing at us at a rapid pace. It's important to keep our attention on what we can manage. That is exceedingly difficult for some people, including myself!! We can focus on short-term and, more importantly, long-term planning to help position ourselves for positive financial outcomes.
The spring season is approaching, and with it, warmer temperatures. I hope you have a chance to get outside this weekend and go for a walk. A nice walk, like a good laugh, is one of the few things that are still "free." It is, as we all know, much less expensive than getting in your car and driving!
Have a wonderful weekend.