Interest Rates and the Economy

46

Randy Locklear LgBy Randy Locklier, President and CEO of Gulf Financial Group

The economy and Federal Reserve Policy are in focus today for savvy investors who are analyzing every new data point to determine the trend. Labor market and inflation data are considered most relevant because the Fed aims for maximum employment and stable prices. Softer labor market data and lower inflation are viewed as pulling forward rate cuts, while stronger labor market data and higher inflation delay the expected timing of cuts.

What we see so far in 2024 is that the combination of lower unemployment and unchanged inflation signals a stronger labor market and sticky inflation. In short, that makes it difficult for the Fed to reduce rates any time soon. That produces a lot of downside volatility in the markets as investors react. That’s why we believe it is important to limit risk in the current period. There is a silver lining though! Higher rates may also present opportunities for investors, as rates are nearing a 20-year high in the CD, annuity, and note market.

Businessman Using Tablet And Laptop Analyzing Sales Data And Economic Growth Graph Chart. Business Strategy. Digital Marketing. Business Innovation Technology ConceptAs the fed rate increases, so do rates on CDs, notes, annuities, bonds, and money markets. At Gulf Financial, we have been aggressively buying these instruments for our clients as rates have peaked above 6% for many of these investments! The time to buy this type of fixed income investment is NOW! We have a brief window, perhaps only a few months to seize these high rates before they go down again. Once the Fed gets into a reduction cycle to stave off recession, interest rates on investments will plummet. We will continue to buy high rate fixed income products for our clients while we can because it isn’t likely to last.

As 2024 has shown, monthly economic data can be noisy, signaling a strong trend one month and then the opposite trend the next month, causing investors great confusion. At Gulf Financial, we perceive a significant amount of risk in the market. The smart play for retirees may be to reduce risk by moving to higher rate fixed income products now.

If you would like to see a current list of what is available in our fixed income market, call Rhonda (833) 403-4041 or visit gulffinancialgroup.com.

ASK ABOUT OUR CD OFFER FOR 2024! UP TO 20% OF ASSETS IN THE USA’S TOP PAYING CD’S WITHOUT A FEE FROM GULF FINANCIAL. (833) 403-4041.

Investments involve risk and unless otherwise stated are not guaranteed. Seek the advice of a financial professional and fully read the prospectus before purchasing any investment.