Values Matter | Relationships by the Numbers

Money Will Never Come Between Us: Watch this video from Principal and advisor Josh Manifold about establishing financial values that are rooted in protecting relationships. Consider establishing your own, and let us know how we can help.

Investors and Interest Rates: It’s one of the most talked about topics from 2023: when will interest rates come down? Investors are currently convinced we’re heading down that road, but their track record on these things isn’t great. Traders keep ramping up bets that rate cuts are just months away, only to see that day recede with each batch of strong economic data.

Investors use futures markets to bet on the direction of central bank policy. Right now, those show traders betting that the Fed will cut rates by more than a percentage point this year, much more than Fed officials are projecting.

Wall Street didn’t expect the Fed to take rates to near 5.5% or that it would hold there for so long. In December, the Fed said it expected to lower rates three times this year, investors bet on six cuts. After Chair Jerome Powell said they weren’t lowering rates in March, investors shifted their wagers to May.

The economy keeps beating expectations, preventing those bets from paying out. Last week’s blockbuster jobs report further enhanced the outlook. The Atlanta Fed now models inflation-adjusted growth as likely being 3.4% in the first quarter—well above levels suggesting a need for rate cuts.

Wage growth, tracked by the Atlanta Fed, is 5% as of January. The pace at which prime-age workers are increasing their wages has yet to break below 5.4% since 2021. Rising worker pay can feed inflation, keeping rates higher. This worries investors and policymakers.

Higher short-term rates are supposed to slow the economy by increasing the cost of borrowing. But Treasury yields have actually come down by almost a full percentage point from their highs last year.

The potential issues are varied, but the bottom line is that investors are nearly always wrong about the Fed.

The U.S. and Marriage/Dating: With Valentine’s Day this week, we thought it would be interesting to look at where the United States is currently trending relationally. The Pew Research Center recently shared this data:

• Most Americans say they’re in a committed relationship of some sort.

• Three in ten Americans say they are single.
• A record share of 40-year-olds have never been married and as of 2021, a quarter of 40-year-olds in the U.S. had never been married—up from 6% in 1980. A study in April 2023 found that relatively few Americans (23%) see marriage as essential for people to live a fulfilling life. Far more say that about factors like job satisfaction (71%) and having close friends (61%).

If you are interested in reading the remainder of the study, you can find it here. We hope you have a happy Valentine’s Day!