Our 2025 Financial Planning Guide is now available. It includes up-to-date information in areas including tax planning, education planning, saving for retirement, and more.

As market concentration has grown, so have the risks associated with it. Large-cap U.S. equities had another banner year as the S&P 500 returned over 25%. Substantial progress has been made on the inflation front, but levels remain stubbornly above the Fed’s 2% target, now sitting at 2.7% and after the Fed’s first rate cut of the year, the 10-year U.S. Treasury yield soared by over 75 basis points—a rare event not seen since 1982.

The Federal Reserve cut its policy rate by another 0.25% in December. Equity markets took a step back in December, and REITs fell in December, negatively impacted by the jump in longer dated interest rates.

A republican victory fueled a rally in the U.S. equity markets in anticipation of pro-business policies such as potential deregulation and tax cuts. The U.S. dollar appreciated, reflecting expectations of inflationary fiscal policies and potential shifts in Federal Reserve actions, and the Federal Reserve and Bank of England cut rates by 25 basis points, citing a need to support economic growth amid moderating inflation.

The Federal Reserve cut its policy rate by another 0.25% in November. U.S. equity markets rallied as investors received some clarity following the presidential election, and REITs ended the month higher, benefiting from the equity market tailwind and a slight decline in interest rates.

Interest rates spiked during the month, a sharp reversal from the third quarter. Equity markets declined across regions, with U.S. large cap outperforming, and a negative month for REITs was primarily driven by the rising interest rate environment, as well as the broader beta to the equity market. 

The Federal Reserve has embarked on the latest cutting cycle, with an initial cut of 50 basis points at its September meeting. Financial markets, on average, have performed well following the onset of an interest rate cutting cycle, and market volatility will likely remain elevated as we head into the presidential election.

The Federal Reserve cut rates by 50 basis points during the month, leading to a rally in bond prices as investors anticipated lower future interest rates. U.S. stocks rose due to investor optimism surrounding future rate cuts, improving economic data, and strong quarterly performance, and REITs had a favorable month.

Inflation improvement and weaker economic data shift Fed sentiment

The Federal Reserve acknowledged a cooling labor market and softening inflation at its Jackson Hole summit, indicating its willingness to shift policy. Domestic equity market performance was mixed with large cap positive and small cap negative, and REITs had a positive month as interest rates declined.

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Softening inflation and signs of the labor market slowing sent interest rates lower during the month. Market leadership shifted during the month as all eyes remain on the Fed and the possibility of a September rate cut, and REITs had a favorable month.

The U.S. Core Consumer Price Index fell throughout the quarter from 3.8 to 3.3 percent, the lowest since April 2021. Investors complacent in cash may miss potential total return opportunities in core fixed income, and concentration in U.S. large cap markets continues to support returns, with nearly half of the S&P 500 Index constituents underperforming during the quarter and generating negative average returns.

Despite continued volatility, fixed income markets posted positive returns as rates fell slightly during the month. U.S. markets were mixed in June. Concentrated leadership and hype around artificial intelligence benefitted large cap while small cap declined, and REITs were positive during the month on expectations of declining rates.

We are honored to be named as one of Atlanta’s Largest Life Insurance Agencies by the Atlanta Business Chronicle for the third year in a row. We’d like to especially thank all of our partners, staff, and advisors who have been instrumental in our growth and success.

Fixed income volatility continued in May as markets continued repricing expectations for the timing of Fed rate cuts in 2024. U.S. markets were positive in May, and REITs were positive during the month.

A fixation on the direction of interest rates continues to drive prices in the short term, including in May. However, we take this opportunity to step back from the short-term focus on rates and discuss the findings of our latest long-term study on the efficient allocation of active and passive investing. Notably, 92% of 10-year top-quartile managers spent at least one 3-year period in the bottom half of their peer group, highlighting that success is not linear.

Markets repriced in April on “higher-for-longer” rates pushing longer duration fixed income and duration sensitive equities lower. Escalating conflicts in the Middle East have led investors to question what impact expanded conflict may have on their portfolios. While these events capture our attention, their fundamental impact on markets tends to be short-lived.

Interest rates rose as market expectations for “higher-for-longer” Federal Reserve policy grew. U.S. equity markets fell in April as investors digested the greater likelihood of the Fed keeping its interest rate target elevated, and the rising interest rate environment and poor equity markets negatively impacted the REIT market during April.