Welcome to fall! It’s hard to believe that we are almost through with September. As I write this on the morning of the 25th, there is a palpable excitement for the Ryder Cup. Newsday ran an article estimating the economic benefit to our area to be $160 million!! During my radio show yesterday, I anecdotally noted that I saw a jet with “United Arab Emirates” written on the fuselage. I know that the UAE doesn’t regularly fly into MacArthur Airport. While I’m not sure it was here for the Ryder Cup, I certainly wouldn’t be surprised! As an unabashed “homer”, my hope is that by the time you are reading this, the US will have regained the cup. Fingers crossed. As you might have guessed from the pictures above, we held another cooking class last week. This was at The Cook’s Studio at their Patchogue, NY location. We made fresh mozzarella, burrata, crostini, and salad. 3 ½ pounds of mozz for every two people! Chef Steph and her humble assistant Kim were, as always, amazing. The [picture on the left is of my daughter, Olivia. In the middle is my wife, Jenn. On the right is Tony V. A lot of “stretch” in these shots! We hope that you will be able to join us at one of our events in the future. Next up, an informational dinner on October 16th at Trento in Farmingdale. There will be discussion on cyber security as well as the psychology of investing. Since the stock and bond markets both continue to have good years, I will spare you from going over statistics. Rather, for the “business” portion of this newsletter, I want to focus on a topic that has been a point of discussion among clients as well as friends and family. Specifically, interest rates, the Fed cutting, and how that might affect mortgage rates. Despite my repeated attempts to address this on my radio show, many feel that there is a direct correlation between the two. If the Fed cuts rates, mortgage rates will come down. I submit to you that there is no direct correlation…especially in the short term. For evidence, we do not need to look any farther back than the last 12 – 13 months. According to ycharts.com, the yield on the 10-year treasury (which is far more related to mortgage rates) was 3.65% on 9/17/24…the day before the FED cut rates by 0.50%. By 11/18/24, it had risen to 4.42% and eventually peaked at 4.79% in January of this year. I should point out that the Fed went on to cut rates by .25% two more times in 2024, in November and December. So, the Fed cut rates by a full 1.0% and the 10-year treasury (and with it, mortgage rates) increased in yield by over 1%. Clearly, mortgage rates did not decline because the Fed cut rates. Now, you may say, rates on the 10-year have come down since then. This is a true statement. Let’s unpack that a bit as well. The Fed cut rates by another 0.25% last week. That was the first cut of 2025. As of this moment, the yield on the 10-year treasury is 4.19%. Looking at the above, the yield was at 3.65% on 9/17/24. The Fed has cut rates by 1.25% since, and the yield on the 10-year has risen by 0.54%. Please remember, the Fed controls the very short end of the yield curve…the overnight lending rate. “markets” control the 10-year treasury and, therefore, mortgage rates. In my opinion, in order for mortgage rates to decline substantially, we will need to see a period of very low inflation (think well below 2%), as well as slow growth (also think 2% or below). Under those scenarios, the bond market may push yields lower. However, to those that are wishing for that, I say “be careful what you wish for.” I much prefer moderate inflation and strong GDP numbers to limited growth and low to non-existent inflation. Hope that helps! Finally, I would like to remind you to tune into my radio show, Financially Speaking, every Wednesday evening at 5:00 pm. It airs on 103.9 FM, LI News Radio. If you are out of the station’s listening range, you can go to their web site, www.linewsradio.com, and click on the “listen live” link or you can download the LI News Radio app. This is a great way for you to keep up with what’s on my mind, my thoughts about current conditions, and some timely information about financial planning topics. Until next time, be well and God Bless! Thank you, Disclosures: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change. References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results. Bond yields are subject to change. Certain call or special redemption features may exist which could impact yield. |
September 2025 Newsletter
