The stock market continues to reach new highs
The market continues to grind higher despite a constant parade of investor concerns. In this environment, it’s more important than ever to stay invested while avoiding complacency.
Interest rates have risen across the board
Interest rates rose significantly during the first quarter and long-term rates could continue to increase as the recovery continues. The Fed has made it clear that they intend to keep short-term interest rates low, possibly until at least 2023. This could continue to steepen the yield curve in the coming quarters.
Inflation expectations are surging too
Prices in certain sectors and inflation expectations in the market are rising. While investors may not need to fear runaway inflation just yet, they should consider asset classes and sectors that may help to protect their portfolios.
Economic activity is accelerating
The economy is recovering well with some indicators of activity at their highest levels in decades. Unemployment continues to improve although many long-term unemployed in hard-hit sectors will need more time to get back on their feet.
Taxes could increase for individuals and corporations
Government spending and new proposals, including the infrastructure bill, may push taxes higher for both individuals and businesses. Investors should consider what this means for their portfolio construction and accounts. However, history shows that both the economy and markets can grow when taxes are both high and low if underlying fundamentals are sound.