It was a nice week for the markets as the S&P 500 closed at 4543 on Friday, its best level since 9 February. While the Russia/Ukraine war continues on, the biggest economic news for the U.S. was interest rates. On Monday Fed Chair Powell vowed to be tough on inflation with rate hikes coming at each of the six remaining policy meetings this year. As investors anticipate a more aggressive Fed, the 10-year Treasury rate hit 2.5%, its highest level since May 2019. As a result, the average rate on the 30-year fixed mortgage shot significantly higher to 4.95%. However, there was some good news as Thursdays first-time jobless claims report reached its lowest level since 1969. It should also be noted that this past week marked the two-year anniversary of the 23 March 2020 pandemic stock market low, which brought us the steepest and fastest drop and rebound in history. Weve come a long way in the past two years, and history has a way of repeating itself. Specifically, between 15 March 2022 and 24 March 2022 we had six out of eight days when the S&P 500 gained over one percent. During these eight days, the S&P 500 gained a total of 8.3%. This has happened only twice in the last eighty years, in 1974 and 2020. Looking back two years, between 29 October 2020 and 9 November 2020 we had six out of eight days when the S&P 500 gained over one percent. During those eight days in 2020, the S&P 500 gained a total of 8.5%, pretty close to what we gained this time around. Now lets look at what happened to the S&P 500 AFTER those eight days in 2020. One month later, the S&P 500 gained 3.4%, three months later the S&P 500 had gained 10.2%, and six months later the S&P 500 was 18.8% higher. If we have similar returns in 2022, the S&P 500 would be at 4675 on 24 April, 4980 on 24 June, and 5372 on 24 September. While those numbers may look somewhat aggressive, we need to think about where we were just two years ago. At that time thoughts of the bull market that weve had since then seemed unthinkable. Collapsing our timeframe, next week should be a busy one for the markets as we get the consumer confidence, GDP and March jobs numbers. For TSP TIPS, last week the C fund gave us an initial buy signal with a Performance Ranking D grade. This week that grade improved to a C, while the S, I and F funds all have a F/negative grade. As such, we are recommending the following allocation.
It was a nice week for the markets as the S&P 500 closed at 4543 on Friday, its best level since 9 February. While the Russia/Ukraine war continues on, the biggest economic news for the U.S. was interest rates. On Monday Fed Chair Powell vowed to be tough on inflation with rate hikes coming at each of the six remaining policy meetings this year. As investors anticipate a more aggressive Fed, the 10-year Treasury rate hit 2.5%, its highest level since May 2019. As a result, the average rate on the 30-year fixed mortgage shot significantly higher to 4.95%. However, there was some good news as Thursdays first-time jobless claims report reached its lowest level since 1969. It should also be noted that this past week marked the two-year anniversary of the 23 March 2020 pandemic stock market low, which brought us the steepest and fastest drop and rebound in history. Weve come a long way in the past two years, and history has a way of repeating itself. Specifically, between 15 March 2022 and 24 March 2022 we had six out of eight days when the S&P 500 gained over one percent. During these eight days, the S&P 500 gained a total of 8.3%. This has happened only twice in the last eighty years, in 1974 and 2020. Looking back two years, between 29 October 2020 and 9 November 2020 we had six out of eight days when the S&P 500 gained over one percent. During those eight days in 2020, the S&P 500 gained a total of 8.5%, pretty close to what we gained this time around. Now lets look at what happened to the S&P 500 AFTER those eight days in 2020. One month later, the S&P 500 gained 3.4%, three months later the S&P 500 had gained 10.2%, and six months later the S&P 500 was 18.8% higher. If we have similar returns in 2022, the S&P 500 would be at 4675 on 24 April, 4980 on 24 June, and 5372 on 24 September. While those numbers may look somewhat aggressive, we need to think about where we were just two years ago. At that time thoughts of the bull market that weve had since then seemed unthinkable. Collapsing our timeframe, next week should be a busy one for the markets as we get the consumer confidence, GDP and March jobs numbers. For TSP TIPS, last week the C fund gave us an initial buy signal with a Performance Ranking D grade. This week that grade improved to a C, while the S, I and F funds all have a F/negative grade. As such, we are recommending the following allocation.