Market Volatility

February 8, 2018

 

 

 

The current share-market volatility being experienced in global markets, particularly in the U.S. but also here in Australia is concerning for some.... but, what is the cause?

 

Recent higher than expected wage growth in the U.S. and strong employment rates have led to fears that the Federal Reserve (the USA’s Reserve Bank) will be more aggressive with interest rate hikes in 2018. The result of this is that the U.S. 10-year treasury bond rate has touched a 4-year high return (currently 2.83% return). When investors are able to receive almost 3% return in a relatively low risk investment like treasury bonds, some will move money from more volatile shares into the relative safety of bonds. Shares over the long-term create more wealth than fixed-income bonds, but they are more volatile and have more risk.  As the federal bonds are a fixed-income investment, we are seeing people moving money in and out of the bonds as they do not wish to be caught in a fixed income investment on a lower rate - as the bond rates increase.

 

This volatility represents a reaction and adjustment to good economic news in the U.S. and other global economies. Pull-backs are a normal part of long-term investing.

 

Recent volatility also raises the question of taking advantage of the possible value available in the markets at the moment.

 

A good time to speak to your adviser.....

 

 

Share on Facebook
Share on Twitter
Please reload

Featured Posts

I'm busy working on my blog posts. Watch this space!

Please reload

Recent Posts

February 8, 2018

August 8, 2017

Please reload

Archive
Please reload

Search By Tags

I'm busy working on my blog posts. Watch this space!

Please reload

Follow Us
  • Facebook Basic Square
  • Twitter Basic Square
  • Google+ Social Icon

Cornucopia FP Pty Ltd ACN 131 679 064 ATF Cornucopia Unit Trust ABN 46 734 010 794. Authorised representative No. 327732 of Affinia Financial Advisers Limited ABN 13 085 335 397 AFSL No. 237857

  • Black Facebook Icon
  • Black LinkedIn Icon

© Copyright CornucopiaFP Pty Ltd 2016