Inflation may be peaking, or at least that is what Treasury bulls are thinking. A rally started at the 20-year note and worked its way to shorter term rates this week: the 30-year yield fell 13 basis points and the ten-year yield fell by 12 basis points. Declining yields were driven by investors flooding into these treasury markets. Still, investors are pricing in a half-point rate increase by the Fed in the next two meetings with an almost 100% chance of reading the tea leaves in the options markets. The rally was really suppressed by Bank of America’s Forecast which said inflation peaked in March and will be on the decline. Similar patterns took place on the long end of the government bond market in the Euro areas as well with Germany and the U.K. seeing their yields fall.

Finsum: The flood in the TIPS market suggests that bond investors still see some persistent inflation in the near term. 

Cherly Young, a financial advisor and team based in Los Gatos, CA is planning on leaving Morgan Stanley and joining First Republic. She’ll be taking her $17 million in annual revenue and a giant $2 billion book with her. Her all-star status and revenue generation has put her in the upper echelon of California Advisors and ranked her #84 on Barron’s nationwide list. First Republic has put in a lot of effort on building a high-end advisor base, and they have offered a variety of incentives to get there. Still their sales force is a fraction of Morgan Stanley’s which boasts 16,000 brokers, and is still touting positive recruiting results. 

Finsum: Many financial firms are forcing full time in-office work, and First Republic sees remote pitch as a part of their campaign, while MS is caping remote work at 90-days. 

The average investor is scared of market conditions and as a result we have seen various measures of sentiment plummet, but now could be the exact moment to hit the dip and ride a bull wave. The first reason is the Bull/Bear ratio which was a 1.12 which below two is buy territory and approaching or below one is a strong buy. The other reason is comically low sentiment which usually proceeds a booming period. While inflation fears are rampant, core inflation took a strong movement in the right direction which means that the Fed won’t have to tighten as much. Finally, the pandemic is starting to show sings of trickling out, and while new variants are spreading each subsequent new variant has had a smaller impact and been less lived. This could be a huge win for supply chains which could trickle into lower inflation and much higher growth.

Finsum: There are early signs of optimism for stocks and bonds; the time to strike could be very soon.

The most recent week of April saw a mass exodus in the global bond market as investors were fleeing in concerns of economic growth. Based on a report from Refinitiv Lipper investors dropped $14.5 billion in bond investment, over ten times the losses from the previous week. Ten year treasury rose sharply to a near three year high, which sent bond prices falling. While inflation is rampant, March actually saw a little bit of relief in core prices as inflation was mainly driven by food and energy. One area of bond funds that hasn’t seen investors scared off is inflation protected funds which are on their seventh straight week of gains and inflows. More concerning than just the tightening cycle is the growth that could result in overtightening which could send the economy reeling. 

Finsum: This could be the bottom of the bond market, investors should prepare for a little bit of a rally if supply chains free up. 

Goldman raised the odds of a recession to over one-third in the next two years. The tightening cycle and rate hikes are causing waves in markets and the Fed could bump the Federal Funds Rate eight times this year. Overall economic health in the G10 helps mitigate the possibility of a recession, but it's still a possibility. Experts are saying that the Fed has a narrow path for a soft landing if they want inflation to come down to 2% and keep unemployment from rising. There are signs that the economy is beginning to weaken as consumer confidence is wavering. Still, the stock market doesn’t seem to pricing in a recession, however, the experts on Wallstreet and financial services are beginning to prepare.

Finsum: Look to the yield curve for recession predictions its the best sign and its beginning to warn investors.

Everyone is racing to develop and deliver a new ESG product, and annuities are just the latest on this trend. BlackRock is teaming up with RetireOne and Midland National to deliver an SG option for a Fixed Index Annuity. The index will seek to minimize its exposure to environmental risk and invest in companies with lower C02 emissions, better data privacy, and workforce diversity. ESG assets as a whole could make up 50% or more of assets under management by 2025 and this is an indication of how that trend is entering other industries. Disclosure and ESG risks are prominent considerations for many companies.

Finsum: This is a great option for investors wanting income and ESG to tackle two birds with one stone.

Charles Stanley is diving deeper into ESG with a new suite of model portfolios geared at responible passive investing. Jane Bansgrove will manage the model portfolios and is the investment director of Charles Stanley’s responsible investment committee. Studies have shown that many have put more emphasis on ESG and sustainability due to the Covid-19 pandemic. The funds will be available across different risk levels with different target growth rates that correspond to them. They are designed to be low cost and efficient like many other passive ESG funds.

Finsum: Model portfolios are a natural marriage with ESG, because thematic investing caters itself to a model that can make selections.

Growth and value don’t typically have strong co-movement with one and other unless its a total market rally, however JPMorgan’s Kolanovic is telling investors that forking central banks, rising commodities, and stock sell off are the catalyst for the bulls to move on value and growth. He told investors to construct a barbell portfolio with bio-tech tech and innovation pulling growth and metals and mining leading the way for value. Its the perfect swarm of macro factors that can elevate these markets. International growth stock have fallen so far they are beginning to show P/E ratios that look like value stocks and should intrigue investors. JPMorgan says the war in Ukraine could persist which will continue to elevate commodities.

Finsum: This is a great time for traditional energy, particularly for bond investors stuck in the cold.

Oil has been dominating headlines but natural gas prices skyrocketed to a t 13 year high on the back of Russia’s war on Ukraine. To add to the fodder temperature forecasts for spring are remarkably low which means homes will be utilizing more natural gas in order heat homes. Overall prices are $8.05 per million British thermal units and are up 108% through the year already. Financial markets aren’t sure this price increase is permanent and Citi has only raised their end price target to $4.60 by the end of 2022.

Finsum: Keep an eye on natural gas bonds as just like oil surging, it could mean good things for companies ability to repay.

It's never too early to begin thinking about tax-loss harvesting and there is a ripe situation in the bond market. The yield curve has been on the rise due to Fed tightening and inflation. Rising yields mean lower bond prices and ETF owners have taken a bath. Selling off those funds right now could give you a tax advantage later this year. However, investors should get out of the fixed income route altogether. Markets are beginning to show signs of a recession or straight volatility so replacing your bond ETF with another fixed-income ETF could help in the case of a recession. Or if bond prices begin to take off it's a good option to have some skin in the game.

Finsum: The wash rule makes harvesting losses in equity markets a bit difficult, but the plethora of bond funds and options gives investors better ability to harvest losses now.