Absolutely right !

The other thing going on is that a couple days ago the Atlanta Fed bank said the economy is on track to grow at 5.6% annually this year.
Yellen would love to see that because of increased tax revenues but this is the LAST thing that Powell wants to see. He is fighting a strong labor market already.

But consider this. If the economy is currently growing at 5.6% with nominal interest rates at 5.5 %...........that indicates to me that the economy could still grow at 3% even if rates were at 6% or higher.

If I can see that.......... I am certain Powell can too.

I’ve been reading where chances are the FED isn’t going to raise rates here in September, but very well could in November. I’ve been thinking about liquidating some assets that have debt on them, to lower other debt, but with the interest rates now and the capital gain taxes I would end up with higher payments so it’s keep working and see what happens.

That's the way I interpreted this also.
If things get bad enough for China they may view hostilities as their best alternative.
Sort of reminds me of FDR in 1939

That was my thought.

That sounds very bad to me given they have the capacity to build and manufacture stuff and we don't; as we shipped it all away.

Food for thought Chancey. 7.1 trillion of US debt matures in the next 12 months. Of course we will have to refinance that debt, the interest rates will at least double. How long are we going to be able to do that.

Another food for thought, August commercial bankruptcies were up 54 percent year over year.

Yes higher rates are necessary to combat inflation, those higher rates come with consequences.

This isn't 1981, the world is awash in debt.

Time for the great re-set.

Best I can figure the banks are betting normal interest rates can last 2 years before we go back to abynormal.

I saw a few credit unions offering 6% on 1 year CD's this morning.
With mortgage rates approaching 8% and ten year treasuries around 4.26% I'd guess they are trying to entice depositors with 6% while locking in 8% mortgages for 30 years.

CD rates are not following the traditional pattern. Feels like shopping for Airline tickets.

LOL ! That's true!

White, I'd like your opinion on something. I've had the POA on my mother for few years now and have been working on cleaning up much of her investment strategy. She is invested in several Bond funds that look to be paying dividends in the 3% range and these bond funds are way underwater right now. The monthly dividends appear to be reinvesting in the bond funds. Would it not be wiser, at this point, to put these dividends in 5 plus percent money markets for awhile? Not savvy on how all this works.

Thanks for any response.

Here's my opinion on that.
It is pretty likely that MOST of the damage has already happened in those bond funds. IF (big if) you believe that the Fed will start cutting rates next year, then those same funds should see price appreciation if and when that happens.

The question on money markets is one of volatility. Rates can and will fluctuate substantially with every daily change in bond yields. Also, if the Fed DOES start lowering rates, those 5% + yields will drop but you won't see any price appreciation as you would in a bond fund.

If I was in that position I would look at opening a Treasury direct account and just use T-bills at this point. I would stay on the short end of the yield curve for now until things become a bit more clear relative to what the Fed will do. I'd be looking at 1-4 month maturities.

If the economy starts to soften significantly and the Fed starts making noises about seriously reducing rates........then I would start locking in some longer term maturities.

One problem with bond funds is that they never mature so you are constantly dealing with fluctuating share prices of the fund NAV.

The way to avoid that is by owning the bonds(or bills/notes) directly and holding them to maturity. The only risk is reinvestment risk

My thoughts are similar " stop putting in the bond fund and look for new fixed investments in 5 plus percent range.?" That's what we are thinking right? The money market is my savings account to hold money until I invest in fixed investments. The way I'm playing it.

Pretty much Yes.

I should add...

Is this bond fund tax advantaged in any way ? Is it corporate/government bonds or is it possibly tax free municipal bonds ?

Is your mom still living ? If so, does she live in a state with an income tax ?

If you sold the bond fund completely, would she benefit at all from the capital loss ? Does she have any other income that could be reduced by that loss for tax purposes ?

Taxes are not that big an issue since the nursing home costs are 100% deductible.

OK. And is she in Alaska ?

The reason I ask is because US Treasuries are not taxed at the state and municipal level.

No.

OK well if she is in a state that has an income tax.....that is another reason in favor of going with treasury securities as opposed to the bond fund. The bond fund "income" could be taxable at the state level.

Well, I can't get her out of the Bond Fund now! Maybe someday!