As the stock markets take another leg down today, key U.S. interest rates are rising again. Like a 13-month round-trip higher and lower, the S&P 500 stock index is back at the levels of early April 2021. Meanwhile, interest rates have only taken a one-way trip higher. The benchmark U.S. 10-year Treasury yield was 3.08% at noon.
In my opinion, this is the most difficult environment for investors since early 2020. Instead of a focused concern like the announcement and spread of the Covid pandemic, which produced a quick although severe dip in the stock market, today’s environment seems to be driven by many slower-moving concerns. I believe this environment is giving investors more time to worry than we had in February and March 2020.
The combination of high rates and a potential recession amidst high inflation is haunting investors. Also, of course, investors are still grappling with the increased geopolitical uncertainty since February. All of this makes it behaviorally difficult to stay true to a long-range investment strategy.
Let us know how we can help. These are opportune times to review and discuss things if you feel anxious about your portfolio. Perhaps an update to your portfolio is justified. On the other hand, doing nothing and sitting tight may feel awkward, but it might be best if your investment time horizon remains long.
