Hello, I’m a planner! I had looked forward to our client appreciation Christmas party we had this week for over six months. The party was at Heirloom 1881. A wonderful crowd came out to enjoy a delicious buffet and to hear inspirational storyteller Kelly Swanson entertain. But before dinner got started, I was told that Amelia wanted to say the Lord’s Prayer to bless the food. Apparently, she made her request to Mallory on the car ride to the party. I was taught that when somebody wants to pray you let them pray! I wasn’t going to stand in her way. The girl has never met a stranger! When I was her age, I remember hiding behind my mom in social settings. Hopefully, Amelia’s extraverted demeanor serves her well in life. She seemed to be a big hit! Amelia is pictured below reciting the prayer.

It’s no secret. Without our clients, we wouldn’t have a financial planning business, and we are grateful for the trust and relationships we’ve been able to develop through the years. We are looking forward to continuing to serve our folks in the years ahead and looking forward to helping many more new families. We are already planning our next client experience and tentatively planning a “Celebrate America” June event. Clients be on the lookout for more information. Ansley and I are pictured with Kelly Swanson below.

Speaking of trust, it appears the government bond market is beginning to lose its appeal. Did you know that a decade ago China and Japan held more than 22% of our Treasury bonds? The countries have been selling their Treasury bond positions to prop up their weakening currencies and as a result they are only holding 7% of our Treasury bonds. The issue at hand is the government continues to borrow to fund our budget deficits but buyers of our debt have begun reconsidering. This in part is driving up what bonds must pay in yields. According to Semafor, an online publication, “The longest-date Treasury bonds are in a bear market worse than the dot-com bust and almost as bad as 2008.” To help remedy this the government could reduce spending but that’s a non-starter which is devaluing bond values.

It's analogous to a person being head over heels in debt and they decide to get another credit card and keep spending. This is essentially what the government is doing. But like the rabid spender getting a new credit card, we are going to pay more in interest to keep going. The weird juxtaposition is that the government, albeit a different department of government, sets interest rates. What’s worse is we can’t forget the banking crisis from this past March. From the Semafor article, “It was the $91 billion pile of U.S. government bonds that sparked Silicon Valley Bank’s failure. Big banks took the regional bank crisis as proof that not only were Treasury bonds not making them money, they weren’t even making them safer.”

We have to remember that the reason rates went up in the first place was to lower inflation levels. The government states inflation is coming down, but when I talk to people coming in the office to talk about finances, they are stating it doesn’t feel like inflation is coming down. The government excludes fuel and food from their inflation metrics which can create feelings different from government reporting. From Reuters, “Bond investors are pricing in imminent Federal Reserve interest rate cuts by the first half of next year, as signs of slowing U.S. economic growth and easing inflation became more evident. While a weakening growth outlook is likely an important factor in keeping the U.S. central bank from raising rates, progress on the inflation front could determine when it will pivot toward monetary policy easing.” I expect the stock market to go up if rates come down. Yields will decrease but bond values will go up as rates work inversely to interest rates. It just seems like it could help the powers that be in an election if rates were to come down too. I know. I know that the Federal Reserve is supposed to work independent of the executive branch but the Chair of the Fed does work at the request of the President. It makes sense that the President may experience some tail winds, but I could be wrong… Until next week, David C. Treece, Financial Planner 864.641.7955

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Clients Excel, LLC is an independent financial services firm that utilizes a variety of investment and insurance products. Investment advisory services offered only by duly registered individuals through Creative One Wealth. Creative One Wealth and Clients Excel, LLC are not affiliated companies. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified tax professional for guidance before making any purchasing decisions. Clients Excel, LLC is not affiliated with or endorsed by the U.S. Government or any governmental agency. Clients Excel, LLC has a strategic partnership with tax professionals and attorneys who can provide tax and/or legal advice. Published on 12.06.2023.