From a wrap-up of the volatile market in 2022, to good news about U.S. treasuries and a quick outlook on the first quarter of 2023, hear what's happening in the markets and how it may affect you in our latest Monthly Market Update from Michael Baum, CFP® RICP®.
Welcome to the Monthly Market Update on You and Your Money. Empowering you to reach your goals with tips and insights to help you plan well, invest well, and live well. This months Market Update comes from Michael Baum, vice president, and associate financial advisor at Weiss, Hale and Zahansky Strategic Wealth Advisors. Here is the latest updates in the financial markets. Take it away Mike.(wooshing sound We can officially close the books on 2022, which was a difficult year for the markets as neither stocks nor bonds offered protection against, what was basically, a perfect storm of persistently high inflation, hawkish monetary policy and heightened geopolitical tensions. So the S&P 500 index, for example, lost about 18.1% on the year with every sector, except for energy and utilities, in the red. Bonds fared only marginally better in 2022, which was really the bigger shock or the bigger drag on portfolios as they're usually a little bit of a buoy for a tough time in the stock market. The US aggregate Bond index, lost 13 percent. So a hypothetical 60/40 portfolio, sort of your classic diversified portfolio, composed of those two major indices, lost about 16 percent. So on the bright side, higher interest rates mean that US treasuries and other short-term fixed income investments are providing solid yields for the first time in many years. Just to give you an example, a two-year US treasury is yielding about 4.4% today compared to just 0.73% a year ago. So that's a real opportunity to get some guaranteed income out of the fixed income side of your portfolio, which is historically the role that bonds have played in diversified portfolios. But as we look to 2023, we anticipate continued volatility, at least for the first half of the year. There are signs that rising interest rates have started to ease inflation, but the FED has pledged to continue raising interest rates and leave them high until the job is fully done. So there's still some work to do there and there's real risk that those those rates remaining high will continue to dampen the economy and push us into a recession in the first half of 2023. Alright, the the labor market does remain very strong and healthy levels of employment and wage growth should support consumer confidence. And spending. So if there is a recession, it seems like it should be pretty mild. And once inflation rolls over, the FED will be able to stop tightening monetary policy and that opens the door for future growth. So we could see that as early as the second half of the year. Optimistic. Thank you for the update. If you'd like to learn more about Weiss, Hale and Zahanski Strategic Wealth Advisors and how their plan well, invest well, live well process can help you visit their website whzwealth.com. You can call them at 860-928-2341(wooshing sound) That's it for today's updates. As always, thanks for listening to You and Your Money. If you enjoy our show, please rate and review us on Apple Podcasts, Spotify, or your other favorite podcast platform. And find even more episodes, videos and other resources at our website, whzwealth.com. Be sure to come back next week for more tips to help you live fearlessly and pursue your financial and life goals. Until then, live well. Weiss, Hale and Zahansky Strategic Wealth Advisors, offer securities and advisory services through Commonwealth. Financial Network. Member FINRA/SIPC, a registered investment advisor. Fixed insurance products and services offered through CES Insurance Agency. They practice at 697 Pomfret Street, Pomfret Center, Connecticut, 06259 and can be reached at 860-928-2341 Weiss, Hale and Zahansky Strategic Wealth Advisors do not provide legal or tax advice. The tenured Financial Services team strive to support clients in achieving their financial life goals. For more information regarding wealth management, and customized financial planning with Weiss, Hale and Zahansky Strategic Wealth Advisors please visit www.whzwealth.com.