Around the Water Cooler By: Gabriel PotterMBA, AIFA® 2014.09.18
As I have noted in past blog posts, CNBC or Bloomberg is usually playing in the background of our main office so that we can keep an eye on the news of the day. You might expect a investment or financial firm to pay the most attention to the stock market averages, like the S&P 500 or the Dow Jones Industrial Average. We do note changes in the major indices but, over the past year or so, a new index has taken on much greater significance to us: the 10 year treasury note yield. In brief, the 10 year started the year at 3% as optimistic investors expected the 2013 gains to translate into quick action on Federal Reserve policy. A soft Q1 dashed hopes for an uninterrupted recovery and the 10 year dipped to 2.4% as investors saw a longer accommodative stance from the central banks. In the past few weeks, the 10 year has climbed back to 2.6% as a San Francisco Fed study indicated that traders’ expectations for interest rate hikes were behind central bank estimates. Quantitative Easing is scheduled to end in October and it looks like the Fed has signaled that we won’t have to wait long for the other shoe to fall.
Gabriel Potter

Gabriel is a Senior Investment Research Associate at Westminster Consulting, where he is responsible for designing strategic asset allocations and conducts proprietary market research.

An avid writer, Gabriel manages the firm’s blog and has been published in the Journal of Compensation and Benefits,...

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