Friday, May 22, 2015

Inflation is Coming, Albeit Slowly

Core consumer-price index figures were released this morning and showed the largest increase in over two years. Core CPI showed a 0.3% increase in April which is the single largest gain since January, 2013.

This figure moves us closer to the Fed's goal of 2% inflation, at which point the Fed will be considering their first interest rate hike since 2006. Stock futures fell slightly on the news while bond yields rose.

Again, we encourage retirees (and really anyone) with bond portfolios to take an in-depth look at the makeup of their bond investments. What is the average maturity? How low are your coupons? What do the individual credits look like? If you own funds or ETFs, the same questions apply. Some bonds will fall slightly when rates rise, others will fall dramatically. Make sure you know how your portfolio will react and make sure you take the appropriate steps you need to take to minimize your surprises.

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