2 min

July 18, 2022 - In A Nutshell

Aug 18, 2022
in a nutshell
  • As investors anticipate more interest rate hikes this month, the market goes back to bumpy — but last week ended on an up note.
  • Bonds are essentially loans you provide companies or governments in the form of investments.
  • While last week’s inflation report confirmed that we hit a 41-year high in June, there are a few signs that we’re moving in the right direction.
Image of Your weekly round-up of money news and what it means for your long-term financial wellness for the week of July 18, 2022.
in a nutshell
  • As investors anticipate more interest rate hikes this month, the market goes back to bumpy — but last week ended on an up note.
  • Bonds are essentially loans you provide companies or governments in the form of investments.
  • While last week’s inflation report confirmed that we hit a 41-year high in June, there are a few signs that we’re moving in the right direction.

In the Markets

As investors anticipate more interest rate hikes this month, the market goes back to bumpy — but last week ended on an up note.

What about bonds? Last week saw rising bond yields, or returns. Learn why this matters, and how you can take advantage.

A closer look at bonds

First, what are bonds? Bonds are essentially loans you provide companies or governments in the form of investments. The companies or governments agree to pay you back by a certain time, plus interest.

The interest rate hikes that we’ve seen from the Fed so far this year have led to higher bond yields (returns) and lower bond prices.

So, as the Fed continues to raise rates, new bonds will pay more interest, and older bonds will cost less.

Eventually, we expect the rate hikes to slow down, taking the pressure off of bond prices.

In the meantime, investors can benefit from older, cheaper bonds or newer, higher interest bonds.

Bottom line? Recurring Investments in a diversified portfolio that includes both stocks and bonds can help you benefit long-term from  unpredictable market movements.

A glass half full (of inflation)

While last week’s inflation report confirmed that we hit a 41-year high in June, there are a few signs that we’re moving in the right direction:

  • Energy prices (think oil, gas, and electricity) were by far the biggest factor in June’s inflation increases. But this inflation report is a look back, and energy and other raw materials are down from their price peaks.
  • Prices for goods (like cars, TVs, and clothes) were actually down double digits from May as supply chains continue to return to normal.

As we continue to ride these market waves, remember, selling during a dip can lock in losses. If you stick with it, you give any short-term losses the potential to recover — and even grow!

This material has been presented for informational and educational purposes only. The views expressed in the articles above are generalized and may not be appropriate for all investors. The information contained in this article should not be construed as, and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy or hold, an interest in any security or investment product. There is no guarantee that past performance will recur or result in a positive outcome. Carefully consider your financial situation, including investment objective, time horizon, risk tolerance, and fees prior to making any investment decisions. No level of diversification or asset allocation can ensure profits or guarantee against losses. Article contributors are not affiliated with Acorns Advisers, LLC. and do not provide investment advice to Acorns’ clients. Acorns is not engaged in rendering tax, legal or accounting advice. Please consult a qualified professional for this type of service.

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