I am quite sure you have no idea what I am talking about. Even if you aren’t the shopper in the family or would never purchase frozen peas or corn, why is this relevant to bond accounts?

Experts predicted that the Federal Reserve Bank would lower interest rates at least three times this year, beginning this June. But now with inflation rearing its ugly head again, it’s doubtful that interest rates will drop anytime soon, and probably not even this year.

Rising Commodity Prices and Your Disposable Income

In the last three years, prices we all pay for commodities are up by as much as 40%. I shop at Costco and Trader Joe’s primarily, and my bills have never been this high. You pick the commodity—fresh vegetables, cheese, toilet paper, paper towels, candy, cosmetics, vitamins—and for the most part, everything else is up.

Other than having less Money in your pocket for the more fun and finer things in life, like eating out at your favorite restaurants, going on vacation, and even buying a new car, you have less disposable income. Sooner or later, the American consumer will pull back, and we will have a mild recession.

Negative Pressure on Bond Accounts and Market Outlook

This news represents negative pressure on bonds and bond portfolios, and consequently on your bond accounts. We began the year with the opportunity to have the best bond results in the last five years, and now, we are in a watch-and-wait setting. The equity markets are up, mainly because profits are up, and AI products are being purchased by every company wanting to remain competitive. This is good for the investor. But if we hit that recession time, expect a healthy (15%) pullback. That’s an ouch!

Equity investors should stay the course and remain a bit more aggressive. Income and conservative investors, just be aware of the potential for a market softening or downturn.

Call me anytime.

Elliot

The post Frozen Vegetables and Your Bond Accounts appeared first on Prosperity Financial Group | San Ramon, CA.

Elliot Kallen Wealth Manager | Registered Principal

For more than three decades, Elliot has provided customized wealth management solutions for entrepreneurs, business owners, retirees, and millennials.

Elliot and his wife, Tammy, are passionate about giving back to the community through their 501(c)(3) foundation, A Brighter Day. Through his partnership with A Brighter Day Charity, the Kallen family has helped local teens and young adults recognize and access resources to cope with the risks of stress and depression.

He enjoys spending his free time with his family. Some of his hobbies include cooking, wine, golf, travel, and studying history.

He lives in Lafayette, California with his wife, step-daughter, and grandson.