12 Days of Christmas: Themes to Know for 2017

For periods in 2016 many an investor pondered whether the Fed would raise interest rates or not. Fixed Income became an alternative to deteriorating equities at the beginning of the year when prices rose and rates fell. With the exception of a short period during March, rates generally fell during the first half of the year. The U.S. Treasury 10 Year Yield Index TNX ultimately made a bottom at 13.50 (1.350%) in July. Following that bottom, interest rates began to pick up and Fixed Income asset prices fell during a period in which U.S Equities began to stretch its legs and emerge as a relative leader again. This shift to rising rates and falling prices within the Fixed Income space caused the asset class to fall from number 1 in DALI in June, down to 4th as of early December. With recent action, TNX made a 52-week high by pushing up to the 26.00 (2.600%) and has since pulled back to the 24.50 (2.450%) level. The rise in rates has already effected our Fixed Income guided ETF strategies, and adapting to the changing interest rates will need to be a focus as we move into 2017.