White House Financial & Settlement Consulting, LLC helps families live an easier and less stressful life through the achievement of their financial goals by providing comprehensive, fee-only, client focused financial advice and exceptional service.
The last few months have seen some big changes in the bond market. At the end of August, the benchmark 10-year U.S. Treasury yield had risen more than 100 basis points from its May 1.66% low, with corporate, mortgage, and municipal bond yields following suit. This seems to have spooked mutual-fund investors, who yanked approximately $60 billion from bond funds in June, $11.7 billion in July, and $27.2 billion in August. (Source: Morningstar) With bond yields now higher than they’ve been in several years and showing few signs of retreating, the question is: where do we go from here? In our opinion the relative attractiveness of the bond market is currently less attractive than other areas of the market: Nevertheless, it remains an essential part of a well-diversified portfolio, helping to manage income and market volatility and drawdowns, particularly amid flights to more conservative investments. Thus, while we will recommend adjusting client portfolio exposure to favor valuati
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August was a difficult month for the U.S. equity market. The S&P 500 Index lost 2.90% while the Russell 2000 Index, tracking U.S. small-cap stocks, fell 3.18%. Overseas, equity markets fared slightly better. The MSCI World ex U.S. Index dropped 1.29%, while the MSCI Emerging Markets Index logged its fifth monthly decline in 2013 with a 1.72% loss. Fixed-income markets followed suit with investment-grade bonds, as represented by the Barclay's U.S. Aggregate Bond Index, slipping 0.51%. Meanwhile, the Barclay's U.S. Corporate High-Yield Bond Index, a measure of the non-investment grade bond market, lost 0.61% in August. The U.S. economy continued to show sputtering improvement in August, but concerns about the possibility of a U.S.-led military strike weighed on global stock markets and boosted the price of oil. Emerging-markets equities also continued to reflect investor unease surrounding both inflation and local loan markets. In fixed income, yields rose as redemption