Source: Bloomberg, SEI Dow Jones Industrial Average data as of 3/10/2020
Equity bears bring out bond bulls
The U.S. Federal Reserve recently made its largest emergency cut to short-term interest rates since the financial crisis of 2008 to 2009. The recent move was an attempt to curb the potential economic fallout from the coronavirus. The yield on the 10-year U.S. Treasury is at an all-time low. After closing 2019 at 1.92%, the yield on the 10-year US Treasury plunged below 0.50% on March 9, according to the U.S. Treasury Department (yields and prices move inversely). Although low yields are unattractive from an incomegeneration perspective, bonds do not merely serve as a source of income in a portfolio. They also may help offset stock market losses in times of turmoil for equities.
Stay calm and stay invested!
Now is not the time to panic. If you’re thinking about selling equities to avoid losses, it’s probably already too late. If you do sell now, you’ll eventually be faced with deciding when to buy back into equities. Our research shows that timing the decision to get back in is just as difficult as timing the decision to get out, and investors are notoriously bad at market timing.
Index Definitions The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and NASDAQ. Important Information This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice. This information is for educational purposes only. Index returns are for illustrative purposes only and do not represent actual investment performance. Index returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. Investing involves risk including possible loss of principal. Diversification may not protect against market risk. Information provided by SEI Investments Management Corporation (SIMC), a wholly owned subsidiary of SEI Investments Company (SEI).
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