“Investment success doesn’t come from ‘buying good things’, but rather from ‘buying things well’.”

- Howard Marks

COMMENTARY

Through March 31st, the S&P 500 has declined 6.5% from its all-time high reached on January 27, 2026. It is currently trading around the same level as it did last summer. The selloff has been more severe in the tech-weighted Nasdaq Composite, which has declined 9.9% from its all-time high made five months ago on October 29, 2025. We are well on our way toward identifying an attractive stock market buying opportunity later this year. Last month, we noted the “primary reason the S&P 500 has been unable to advance since October is the exhaustion of upside momentum in large-cap technology stocks.” That remains the case, despite the excitement about a productivity surge driven by broad AI adoption.

Investors are increasingly concerned about an economic slowdown and rising inflationary pressures. The New York Fed’s GDP Nowcast estimates first-quarter real GDP growth at +2.1%, while the Atlanta Fed’s GDPNow forecasts 2.0% growth in the first quarter. In the fourth quarter of 2025, real GDP growth slipped to 0.7%, following 4.4% growth in the third quarter.

Subscriber Note: We added an “Economic Dashboard” to our website, which tracks the key economic indicators we regularly monitor. You can access it anytime here: https://econ.brinkeradvisor.com/

The Association of American Railroads (AAR) reported that total combined rail traffic increased 1.8% through the first 11 weeks of 2026 compared to the same period last year. The combined rail traffic figure includes cumulative carload volume up 4.7% and intermodal units down 0.4%. In the most recent reporting week, five of the ten carload commodity groups posted increases compared to the same week last year, while the remaining five posted declines.

The American Trucking Associations’ Truck Tonnage Index rose 2.6% in February, following a 0.7% increase in January, rising to the highest level in 3 years. On a year-over-year basis, the index rose 2.1%, the largest year-over-year gain since October 2022. Trucking is an excellent barometer of economic activity, accounting for more than 70% of the tonnage carried by all modes of domestic freight transportation. A recovery in the goods sector appears to be underway.

The American Staffing Association (ASA) Staffing Index suggests staffing trends are holding steady. The index’s four-week moving average was unchanged at 86. Temporary and contract staffing employment in the four weeks ending March 15 was 4.0% higher than in the same period of 2025. We follow temporary staffing levels because short-term staffing changes often precede changes in full-time staffing.

HOUSING MARKET UPDATE

The NAHB/Wells Fargo Housing Market Index (HMI) measures conditions in the single-family housing market. The index rose one point in March to 38, well below the 50 threshold that signals favorable sentiment among builders. The current sales conditions index increased one point to 42; the measure of sales expectations over the next 6 months gained two points to 49; and the prospective buyer traffic index rose three points to 25. The NAHB Chair noted that “affordability for buyers and builders remains a top concern” and that “many buyers remain on the fence waiting for lower interest rates and due to economic uncertainty”. Nearly two-thirds of builders continue to offer sales incentives to support the market. Regionally, the Northeast was static at 44, the Midwest was unchanged at 43, the South held steady at 35, and the West fell two points to 31.

INFLATION UPDATE

The Fed’s preferred inflation measure is the personal consumption expenditures (PCE) price index. In January, the headline PCE inflation rate was 2.8% year-over-year. The core PCE inflation rate, which excludes the volatile food and energy components, was 3.1% year-over-year in January. These inflation figures remain stubbornly above the Fed’s 2% inflation target. More importantly, the recent increase in energy prices worldwide makes it unlikely that we will see inflation move toward the 2% target in the near term. Accelerating inflation makes it challenging for FOMC members to lower the fed funds rate.

Headline PCE:

+0.3% seasonally adjusted

+2.8% year-over-year

Core PCE: (excludes food and energy)

+0.4% seasonally adjusted

+3.1% year-over-year

FEDERAL RESERVE UPDATE

The next FOMC meeting is scheduled for April 28th and 29th. At the March meeting, FOMC members voted 11-1 to keep the fed funds rate unchanged at the 3.5% to 3.75% target range. The Committee also continued its balance sheet policy, noting that it will increase System Open Market Account holdings by purchasing Treasury bills and, if needed, other Treasury securities with remaining maturities of 3 years or less to maintain ample reserves. The Fed will also roll over at auction all principal payments from its Treasury securities holdings and reinvest all principal payments from its agency securities holdings into Treasury bills.

In the March 2026 Summary of Economic Projections, FOMC members left their median forecast for the fed funds rate at year-end 2026 unchanged at 3.4%. The central tendency was in a range of 3.1% to 3.6%, indicating roughly zero to two rate cuts between now and year-end, depending on how the economy and inflation evolve. Compared with the December projections, the central tendency for 2026 real GDP growth edged slightly higher to 2.2% to 2.5%, the unemployment rate forecast was 4.3% to 4.5%, and the PCE inflation forecast increased to 2.6% to 3.1%.

The next FOMC meeting is a month away, but as of this writing, most FOMC members are content to leave the fed funds rate unchanged, waiting to see how the economic data evolves over the coming months.

MONEY SUPPLY

MODEL PORTFOLIOS UPDATE

Below is the monthly update of the Marketimer and Brinker Fixed Income Advisor Model Portfolios through March 31, 2026.

Read more

COMMENTARY

According to the Congressional Budget Office (CBO), the federal budget deficit reached $1.0 trillion during the first five months of fiscal year 2026. This fiscal year’s deficit is $142 billion lower than the same period one year ago. Tax receipts rose by $206 billion (+11%) and expenditures increased by $64 billion (+2%).

U.S. TREASURY AUCTIONS

The U.S. Treasury has a full schedule of upcoming auctions. Investors can purchase Treasuries at no cost via the TreasuryDirect.gov website or at most major brokerages, including Vanguard, Fidelity, and Schwab.

BILLS

NOTES

BONDS

Treasury Inflation-Protected Securities (TIPS)

The current 10-year TIPS yield is 1.80% (+CPI).

MONEY MARKET & CD RATES

Below are some of the most attractive money market yields and CD rates available nationwide, sorted by maturities from three months to five years. Click this link to verify that a bank is FDIC-insured. You can click on the institution name in the following list to go directly to the bank’s website for more information regarding CD purchase minimums, etc. We always recommend individual CD purchases be limited to within the $250,000 FDIC insurance limit.

Money Market Funds:

• Vanguard Federal Money Market Fund (VMFXX) 3.58%

• Vanguard Municipal Money Market Fund (VMSXX) 1.69% (tax-exempt)

• Fidelity Money Market Fund (SPRXX) 3.36%

• Schwab Value Advantage Money Fund (SWVXX) 3.49%

VMFXX has a more attractive tax-equivalent yield than VMSXX for readers in the 35% or lower federal income tax bracket. Below is a tax-equivalent yield comparison of VMFXX versus VMSXX using the 2026 federal income tax brackets:

CDs

3-months:

• Northern Bank Direct 4.15%

• Brilliant Bank 4.00%

• Popular Direct 3.90%

6-months:

• Northern Bank Direct 4.15%

• Popular Direct 4.10%

• E*Trade 4.05%

• Marcus 4.05%

12-months:

• E*Trade 4.10%

• Popular Direct 4.05%

• Marcus 4.00%

• Sallie Mae Bank 4.00% (11-month)

18-months:

• Marcus 4.00%

• Vio Bank 3.95%

• Sallie Mae 3.95% (15 months)

2-years:

• Marcus 3.95%

• Sallie Mae 3.90% (30 months)

• Popular Direct 3.85%

• M.Y Safra Bank 3.85%

3-years:

• Sallie Mae 3.95%

• Marcus 3.90%

• Popular Direct 3.85%

4-years:

• Marcus 3.85%

• TAB Bank 3.75%

• M.Y Safra Bank 3.75%

5-years:

• Sallie Mae 4.00%

• Marcus 3.90%

• M.Y Safra Bank 3.80%

In case you missed it, here is our Model Portfolio Update published earlier this month.

“History does in a vague way repeat itself, but it does it slowly and ponderously, and with an infinite number of surprising variations.”

-Fred Schwed

COMMENTARY

The S&P 500 has been moving sideways over the past four months. In February, it closed at 6879, slightly below its closing level of 6891 reached on October 28th. The primary reason the S&P 500 has been unable to advance since October is the exhaustion of upside momentum in large-cap technology stocks. The Nasdaq Composite index achieved its all-time closing high of 23958 on October 29th. Every subsequent Nasdaq rally since late October has failed. The tech-heavy Nasdaq finished February at roughly the same levels it was trading at in September. (See Nasdaq chart below)

We have mentioned before that the largest technology companies now represent a significant 40% weighting in the S&P 500 Index. We think it is unlikely equity markets will be able to make a sustainable move higher without the participation of large-cap technology stocks.

Investors continue to add leverage to their investment accounts. FINRA reported that investors’ margin debt balances reached another record high of $1.3 trillion in January, up 36.5% year-over-year. Regardless of when the market turns lower, this increasing level of margin debt will accelerate the pace of the decline as leveraged investors are forced to sell. In addition, short-dated options volume continues to grow according to CME Group. “Interest in short-dated options has grown, with maturities under one week now driving a large portion of overall Equity option trading volumes.”

Money Market Assets climbed to $7.8 trillion in late February, including $3.1 trillion in retail accounts. Below is a note we published last week that lists some of the most attractive CD rates available nationwide:

HOUSING MARKET UPDATE

The NAHB/Wells Fargo Housing Market Index (HMI) measures conditions in the single-family housing market. The index fell one point in February to 36, well below the 50 threshold that signals favorable sentiment among builders. The current sales conditions index was unchanged at 41; the measure of sales expectations over the next 6 months fell by three points to 46; and the prospective buyer traffic index dropped by two points to 22. The NAHB Chair noted that “the majority of builders continue to deploy buyer incentives, including price cuts, many prospective buyers remain on the sidelines. Although demand for new construction has weakened, remodeling demand has remained solid given a lack of household mobility.” Regionally, the Northeast fell one point to 43, the Midwest was unchanged at 43, the South fell one point to 35, and the West dropped two points to 33.

INFLATION UPDATE

The Fed’s preferred inflation measure is the personal consumption expenditures (PCE) price index. In December, the headline PCE inflation rate was 2.9% year-over-year. The core PCE inflation rate, which excludes the volatile food and energy components, was 3.0% year-over-year in December. These inflation figures remain stubbornly above the Fed’s 2% inflation target. More importantly, there is little evidence that the inflation rate is moving toward the 2% target, making it difficult for the Fed to lower the fed funds rate despite signs of a weak labor market.

Headline PCE:

+0.4% seasonally adjusted

+2.9% year-over-year

Core PCE: (excludes food and energy)

+0.4% seasonally adjusted

+3.0% year-over-year

FEDERAL RESERVE UPDATE

The next FOMC Meeting is scheduled for March 17th and 18th. The meeting will include an updated Summary of Economic Projections (SEP) from FOMC members. Here is a link to their December 2025 projections. We do not anticipate any monetary policy change at the March meeting. CME FedWatch probabilities show a 93% expectation of no change to the fed funds rate in March.

MONEY SUPPLY

The inflation-adjusted year-over-year growth rate of the monetary base stands at -6.2% through January, while the growth rates of M-1 and M-2 are 1.6% and 1.9%, respectively.

MODEL PORTFOLIOS UPDATE

Below is the monthly update of the Marketimer and Brinker Fixed Income Advisor Model Portfolios through February 28, 2026.

Read more

"Spend each day trying to be a little wiser than you were when you woke up."

– Charlie Munger

COMMENTARY

Real gross domestic product (GDP) grew at a 4.4% annual rate in the third quarter of 2025, following a 3.8% pace of growth in the second quarter, according to the latest Bureau of Economic Analysis report. The first nine months of 2025 saw average real GDP growth of 2.6%. The fourth quarter GDPNow estimate from the Atlanta Fed is currently 4.2%. The New York Fed fourth quarter GDP Nowcast is 2.7%.

Personal consumption expenditures (consumer spending) are the most important component within the GDP report, representing nearly 70% of GDP. During the third quarter, PCEs contributed 2.3% to the overall 4.4% GDP figure, as consumer spending had another solid quarter. Gross private investment was flat at 0.0%. Net exports added 1.6%, and government consumption expenditures added 0.4%. View a more detailed GDP contribution breakdown in Table 2 of the report.

The Bureau of Economic Analysis (BEA) expects to publish the fourth quarter 2025 GDP report and the December PCE inflation report on February 20th:

This month, we will briefly review the five primary causes of a bear market:

Tight Money: The FOMC has been working to lower its restrictive monetary policy stance and has cut the federal funds rate three times since August. The current fed funds target range of 3.5% to 3.75% is close to a neutral policy stance. The FOMC recently ended the quantitative tightening (QT) program, which had been shrinking the Fed’s balance sheet. The Fed is also working to limit the growth in the monetary base. The following chart shows that the year-over-year percent change in the total monetary base has been below zero for most of the past year.

High Inflation: The overall pace of inflation has been moving sideways in recent months, above the Fed’s 2% inflation target. Although the core PCE inflation rate has decelerated from the very high levels a few years ago, the current 2.8% rate remains elevated. This makes it challenging for the FOMC to keep lowering the fed funds rate, despite the weakness in the labor market.

Rapid Growth: The latest gross domestic product (GDP) forecasts indicate the economy is growing at a solid pace. Technology firms continue to invest substantial amounts into artificial intelligence infrastructure. Despite strong GDP growth, slowing demographic trends and businesses’ reluctance to hire have led to a deceleration in overall hiring. The year-over-year change in nonfarm payrolls is poised to turn negative soon, unless hiring accelerates.

Rising Rates: The FOMC is now in a data-dependent position with the fed funds rate near neutral. Thus far, the Fed has avoided triggering a recession due to excessively tight monetary policy. The prospect of rising rates appears to be a low risk. The U.S. Treasury yield curve inversion that lasted more than 2 years recently ended, with the 10-year note yield 55 basis points above the 3-month bill yield.

Overvaluation: In early 2000, extreme market euphoria pushed S&P 500 valuations to nearly twice their historical average. This peak, characterized by a price/earnings ratio of 30, triggered a three-year bear market that did not find a definitive floor until March 2003. Although we are not quite at those levels of overvaluation today, several other valuation indicators are flashing warning signals. FINRA reports that margin debt exceeded $1.2 trillion in December, up from $900 billion a year ago. Another example is the S&P 500 price-to-sales ratio, which exceeded its 2000 peak and continues to rise significantly.

MarketWatch columnist Mark Hulbert recently shared the following table of ten stock market valuation indicators, most of which are at (or near) peak levels.

All of these factors are considered in our equity allocations shown in the Marketimer and Brinker Fixed Income Advisor model portfolios below.

INFLATION UPDATE

The Fed’s preferred inflation measure is the personal consumption expenditures (PCE) price index. We recently received the combined October and November 2025 inflation figures, which were delayed by the government shutdown. The data showed that the headline PCE inflation rate was 2.8% year-over-year in November. The core PCE inflation rate, which excludes volatile food and energy components, was also 2.8% year-over-year. These figures remain above the Fed’s 2% inflation target level.

HOUSING MARKET UPDATE

The NAHB/Wells Fargo Housing Market Index (HMI) measures conditions in the single-family housing market. The index fell two points in January to 37, remaining well below the 50 threshold that signals favorable sentiment among builders. The current sales conditions index decreased by 1 point to 41; the measure of sales expectations over the next 6 months fell by 3 points to 49; and the prospective buyer traffic index dropped by 3 points to 23. The new single-family home market continues to show signs of cooling, with 40% of builders reporting price cuts in January, the third consecutive month at or above this level. The average price reduction increased to 6%, up from 5% in December. The use of sales incentives remains high at 65%, marking 10 consecutive months in which this share has exceeded 60%.

FEDERAL RESERVE UPDATE

The Federal Open Market Committee (FOMC) voted 10-2 to keep the federal funds rate unchanged at the January meeting. In the post-meeting statement, FOMC members noted “that economic activity has been expanding at a solid pace. Job gains have remained low, and the unemployment rate has shown some signs of stabilization. Inflation remains somewhat elevated.”

The two dissenting votes were cast by Fed Governors Miran and Waller, both of whom preferred a 25 basis point rate cut at the meeting. A few days later, Fed Governor Waller explained his dissenting monetary policy vote by noting that “Payroll gains in 2025 were very weak. Compared to the prior ten-year average of about 1.9 million jobs created per year, payrolls increased just under 600,000 for 2025. And, last year’s data will be revised downward soon to likely show that there was virtually no growth in payroll employment in 2025. Zero. Zip. Nada.”

The next FOMC meeting is scheduled for March 17th and 18th. The March meeting will include an updated Summary of Economic Projections (SEP). The latest CME FedWatch probabilities indicate a rate cut is unlikely at the March FOMC meeting.

Fed Chair Powell said most FOMC members are satisfied with the current stance of monetary policy, and any future rate decision will depend on incoming economic data. Chair Powell also refused to engage in any dialogue about the next Fed Chair nominee or his plans to remain at the Fed after his term as Fed Chair ends.

You can watch his Jan 28th post-meeting press conference below or read a transcript.

Fed Chair Powell’s term as Chair ends in May, and President Trump has nominated former Fed Governor Kevin Warsh as his replacement. Warsh will need to go through the Senate confirmation process. Chair Powell has the option to remain on the Fed’s Board of Governors until January 2028, although we do not expect him to do that. Normally, an outgoing Fed Chair resigns from the board upon leaving the Chair. Powell has served as a member of the Fed Board of Governors since 2012.

MONEY SUPPLY

MODEL PORTFOLIOS UPDATE

Below is the monthly update of the Marketimer and Brinker Fixed Income Advisor Model Portfolios through January 31, 2026.

Read more

“What may work for the few cannot work for the many.”

- John Bogle

COMMENTARY

Happy New Year! 2025 was another excellent year for stock and bond investors. The S&P 500 Index produced a total return of 17.9%, and the S&P U.S. Aggregate Bond Index increased 7.1%. The Vanguard Federal Money Market Fund (VMFXX) returned 4.2%. The Vanguard Total Stock Market Index Fund (VTSAX) returned 17.1%.

The S&P 500 Index has posted strong total returns in six of the past seven years:

The S&P 500 set numerous all-time closing highs throughout the year, ending the year just below its record-high closing level of 6,932 achieved on December 24th. The table below shows the ten highest S&P 500 Index closing levels:

Looking ahead, our 2026 forecast is for 2% real GDP growth, a deceleration in inflation toward the Fed’s 2% target, and a weakening labor market.

INFLATION UPDATE

The Fed’s preferred inflation measure is the personal consumption expenditures (PCE) price index. We finally received the shutdown-delayed inflation figures for September 2025, which showed the headline PCE inflation rate was 2.8% year-over-year. The core PCE inflation rate, which excludes the volatile food and energy components, was also 2.8% year-over-year.

Headline PCE:

+0.3% seasonally adjusted in September, following 0.3% in August

+2.8% year-over-year

+2.8% latest 3 months annualized

+2.7% latest 6 months annualized

Core PCE: (excludes food and energy)

+0.2% seasonally adjusted in September, following 0.2% in August

+2.8% year-over-year

+2.7% latest 3 months annualized

+2.7% latest 6 months annualized

HOUSING MARKET UPDATE

The NAHB/Wells Fargo Housing Market Index (HMI) measures conditions in the single-family housing market. The index rose 1 point in December to 39, though it remains below the 50 threshold that signals favorable sentiment among builders. The current sales conditions index increased by 1 point to 42; the measure of sales expectations over the next 6 months rose by 1 point to 52; and the prospective buyer traffic index held steady at 26. The new single-family home market continues to show signs of cooling, with 40% of builders reporting price cuts in December. The use of sales incentives reached 67%, the highest percentage in the post-COVID-19 era. The NAHB Chairman noted that “builders are contending with rising material and labor prices, as tariffs are having serious repercussions on construction costs.” Regionally, the Northeast fell 1 point to 47, the Midwest rose 2 points to 43, the South increased 2 points to 36, and the West gained 4 points to 34.

FEDERAL RESERVE UPDATE

The Federal Open Market Committee (FOMC) voted to lower the federal funds rate 25 basis points at the December FOMC meeting to a target range of 3.5% to 3.75%. FOMC members noted that although inflation remains somewhat elevated, job gains have slowed and the unemployment rate edged higher. The FOMC also determined that reserve balances have declined to ‘ample’ levels and initiated purchases of shorter-term Treasury securities as needed to maintain an ample supply of reserves. Three FOMC members voted against the December policy action. Stephen Miran preferred a 50 basis point rate cut. Austan Goolsbee and Jeffrey Schmid preferred keeping the federal funds rate unchanged.

The December meeting provided FOMC members with an opportunity to share their latest economic forecasts. Over the next 12 months (through December 2026), the central tendency of those forecasts is real GDP growth of 2.1% to 2.5%, an unemployment rate of 4.3% to 4.4%, headline PCE inflation of 2.3% to 2.5%, and core PCE inflation of 2.4% to 2.6%. The federal funds rate forecast ranges from 2.9% to 3.6%.

Below is a chart showing the distribution of FOMC members’ fed funds rate forecasts for December 2026, highlighting the divergent views on monetary policy.

Following the December meeting, Fed Chair Powell hosted a press conference. You can watch it below or read the PDF transcript.

The next FOMC meeting is scheduled for January 27th and 28th. As of this writing, a rate cut is not expected at the January meeting. However, if the jobs figures continue to disappoint, another rate cut in January will become increasingly likely over the coming weeks.

Here are the scheduled 2026 FOMC meetings:

And here are the FOMC voting member rotations for 2026:

MONEY SUPPLY

MODEL PORTFOLIOS UPDATE

Below is the monthly update of the Marketimer and Brinker Fixed Income Advisor Model Portfolios through December 31, 2025.

Read more

“We pay the debts of the last generation by issuing bonds payable by the next generation.”

-Lawrence J Peter

COMMENTARY

The S&P 500 Index ended November at 6849.09, down slightly from its all-time closing high of 6890.89 on October 28th. As shown in the chart above, since bottoming in April, the S&P 500 rallied strongly into early October. Over the past two months, the index has oscillated between 6500 and 6900. Through November, the index has generated a total return of 17.8%. Even more impressive, the S&P 500 total return has exceeded 17% in six of the last seven calendar years:

S&P 500 Total Return

2025 through 11/30: 17.8%

2024 25.0%

2023 26.3%

2022 -18.1%

2021 28.7%

2020 18.4%

2019 31.5%

Despite the volatility introduced by the recent 43-day government shutdown and the resulting “data blackout,” the stock market has remained remarkably resilient, driven by expectations that the Federal Reserve will continue its rate-cutting cycle in December. The probability of a 25 basis point rate cut at the upcoming December 9-10, 2025 FOMC meeting is almost 90%, according to CME FedWatch. Fed officials are well aware of this market expectation, so their lack of pushback suggests they plan to lower the fed funds rate to a target range of 3.5% to 3.75%.

Assets held in money market funds remain elevated. As of late November, ICI reported $7.567 trillion invested in money funds, including $3.03 trillion in retail funds and $4.53 trillion in institutional funds.

HOUSING MARKET

The NAHB/Wells Fargo Housing Market Index (HMI) measures conditions in the single-family housing market. The index rose 1 point in November to 38, the highest reading since April, though it remains below the 50 threshold that signals favorable sentiment among builders. The current sales conditions index increased by 2 points to 41; the measure of sales expectations over the next 6 months fell by 3 points to 51; and the prospective buyer traffic index increased by 1 point to 26. According to NAHB economists, “We continue to see demand-side weakness as a softening labor market and stretched consumer finances are contributing to a difficult sales environment.” In November, 41% of builders reported cutting home prices, a record high in the post-COVID period. Regionally, the Northeast rose two points to 48, the Midwest dropped one point to 41, the South increased three points to 34, and the West gained two points to 30.

INFLATION UPDATE

The Bureau of Economic Analysis (BEA) has not published the personal consumption expenditure (PCE) inflation data since the government shutdown. They expect to resume publishing the inflation reports in December. The Bureau of Labor Statistics (BLS) reported the September producer price index last week, showing prices rose 2.7% year-over-year through September 2025. The lack of incoming inflation data adds to the difficulty that FOMC members face as they approach the December monetary policy decision. We expect a rate cut at the December FOMC meeting.

MONEY SUPPLY

MODEL PORTFOLIOS UPDATE

Below is the monthly update of the Marketimer and Brinker Fixed Income Advisor Model Portfolios through November 30, 2025.

Read more

The longest government shutdown in U.S. history (43 days) ended last week after Congress passed a short-term funding bill that funds the federal government through January 30, 2026. According to the Congressional Budget Office (CBO), the federal budget deficit totaled $1.8 trillion in fiscal year 2025, which ended September 30. Receipts increased 6% ($317 billion) while expenditures rose 4% ($275 billion). Total interest on the national debt surpassed $1 trillion for the first time.

U.S. TREASURY AUCTIONS

The U.S. Treasury has a full schedule of upcoming auctions. Investors can purchase Treasuries at no cost using the TreasuryDirect.gov website or at most major brokerages, including Vanguard, Fidelity, and Schwab.

BILLS

NOTES

BONDS

Treasury Inflation-Protected Securities (TIPS)

The current 10-year TIPS yield is 1.83% (+CPI).

Floating Rate Notes (FRNs)

MONEY MARKET & CD RATES

Below are some of the most attractive money market yields and CD rates available nationwide, sorted by maturities from three months to five years. Click this link to verify that a bank is FDIC-insured. You can click on the institution name in the following list to go directly to the bank’s website for more information regarding CD purchase minimums, etc. We always recommend individual CD purchases be limited to within the $250,000 FDIC insurance limit.

Money Market Funds:

• Vanguard Federal Money Market Fund (VMFXX) 3.89%

• Vanguard Municipal Money Market Fund (VMSXX) 2.49% (tax-exempt)

• Fidelity Money Market Fund (SPRXX) 3.64%

• Schwab Value Advantage Money Fund (SWVXX) 3.79%

VMFXX has a more attractive tax-equivalent yield than VMSXX for readers in the 35% or lower federal income tax bracket. Below is a tax-equivalent yield comparison of VMFXX versus VMSXX using the 2025 federal income tax brackets:

View the recently published 2026 IRS tax brackets below:

CDs

3-months:

• Mutual One Bank 4.13%

• Brilliant Bank 4.06%

• Ivy Bank 4.00%

6-months:

• Mutual One Bank 4.33%

• Total Bank 4.25%

• Limelight Bank 4.15%

12-months:

• Hyperion Bank 4.25% (13-months)

• Limelight Bank 4.05%

• Total Bank 4.00%

• Federal Savings Bank 4.00%

18-months:

• Sallie Mae 4.10% (15 months) and 3.95% (18 months)

• Brilliant Bank 4.06% (15 months)

• Marcus by Goldman Sachs 4.00%

• Federal Savings Bank 4.00%

2-years:

• Hyperion Bank 4.00%

• Federal Savings Bank 4.00%

• Marcus by Goldman Sachs 3.95%

3-years:

• Federal Savings Bank 3.95%

• Sallie Mae 3.90%

• Marcus by Goldman Sachs 3.90%

4-years:

• Prime Alliance Bank 3.90%

• Marcus by Goldman Sachs 3.85%

• Federal Savings Bank 3.80%

5-years:

• Synchrony Bank 4.00%

• Sallie Mae 4.00%

• Marcus by Goldman Sachs 3.90%

MUNICIPAL BOND AUCTIONS

Read the following list for some of the largest upcoming municipal bond offerings nationwide:

Source: EMMA, BondLink

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In case you missed it, here is our Model Portfolio Update published earlier this month.

“Cash combined with courage in a time of crisis is priceless.”

–Warren Buffett

COMMENTARY

The Federal Open Market Committee (FOMC) voted to lower the federal funds rate 25 basis points to a target range of 3.75% to 4.0% at the October meeting. FOMC members also decided to conclude their quantitative tightening (QT) program, effective December 1st. The QT program has enabled the Fed’s balance sheet to shrink by more than $2.2 trillion from a peak of $9 trillion in April 2022 to its current $6.6 trillion level.

In the post-meeting statement, FOMC members noted moderate economic growth, an elevated inflation rate, and a slowing labor market. FOMC members are divided on whether additional rate cuts are needed, and the October meeting highlighted those divisions. There were two votes against the policy decision, with one member (Stephen Miran) favoring a larger 50 basis point rate cut and another (Jeffrey Schmid) wanting to keep the federal funds rate unchanged.

Hopefully, there will be more timely economic data on the labor market and inflation available to committee members over the coming weeks. The next FOMC meeting is scheduled for December 9th and 10th. The December meeting will include an updated Summary of Economic Projections, which presents economic forecasts for real GDP growth, inflation, unemployment, and the federal funds rate. As of this writing, investors currently think a 25 basis point rate cut is slightly more likely than no rate cut at the December meeting. However, these expectations are likely to change as more recent inflation and labor market data are published between now and early December.

Subscribers can watch Fed Chair Powell’s press conference online or read the PDF Transcript.

“The outlook for employment and inflation has not changed much since our meeting in September. Conditions in the labor market appear to be gradually cooling, and inflation remains somewhat elevated.” -Fed Chair Powell

The FOMC published the following meeting schedule for 2026: January 27-28, March 17-18*, April 28-29, June 16-17*, July 28-29, September 15-16*, October 27-28, December 8-9*. The asterisk* denotes meetings that include an updated Summary of Economic Projections.

Fed Chair Powell’s four-year term as Chairman of FOMC runs from May 2022 to May 2026. According to recent reports, five candidates are being considered to replace Chair Powell: Kevin Hassett, Kevin Warsh, Christopher Waller, Michelle Bowman, and Rick Rieder. An announcement is coming soon about who will be the next Fed Chair. We do not expect Chair Powell to remain on the Board of Governors after his term as Chair expires, though that option is available.

HOUSING MARKET UPDATE

The NAHB/Wells Fargo Housing Market Index (HMI) measures conditions in the single-family housing market. The index rose five points in October to 37, the highest reading since April, though still below the 50 threshold that signals favorable sentiment among builders. The current sales conditions index increased four points to 38, the measure of sales expectations over the next six months jumped nine points to 54, and the prospective buyer traffic index gained four points to 25. According to NAHB economists, “most home buyers are still on the sidelines, waiting for mortgage rates to move lower.” In October, 38% of builders reported cutting home prices, with the average reduction rising to 6%, while 65% continued to use sales incentives to attract buyers. Regionally, the Northeast rose two points to 46, the Midwest was steady at 42, the South increased two points to 31, and the West gained two points to 28.

INFLATION UPDATE

Due to the government shutdown, the Bureau of Economic Analysis (BEA) is not publishing the monthly personal consumption expenditure (PCE) price index report. We expect the government shutdown will end soon, and the inflation and labor market reports will resume.

In the meantime, the Bureau of Labor Statistics convened to compile the consumer price index (CPI) inflation report, as the information was needed to compute Social Security’s annual Cost-of-Living adjustment (COLA). “The 2.8 percent cost-of-living adjustment (COLA) will begin with benefits payable to nearly 71 million Social Security beneficiaries in January 2026” per SSA.gov.

The headline CPI rose 0.3% in September, following a 0.4% increase in August. Over the most recent twelve month period, headline CPI rose 3.0%. The core CPI, which excludes the volatile food and energy components, rose 0.2% in September. During the past twelve months, core CPI increased 3.0%. As shown in the chart below, the inflation rate remains above the Fed’s 2% target level.

Treasury announced the updated Series I Savings Bond rate last week. The updated 4.03% rate applies to I Bonds purchased from Nov 1, 2025 to April 30, 2026. The rate includes a 0.90% fixed rate and a 1.56% semiannual inflation rate.

MONEY SUPPLY

MODEL PORTFOLIOS UPDATE

Below is the monthly update of the Marketimer and Brinker Fixed Income Advisor Model Portfolios through October 31, 2025.

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“The secret to investing is to figure out the value of something – and then pay a lot less.”

– Joel Greenblatt

COMMENTARY

The S&P 500 achieved a new all-time record high on September 22nd when it closed at 6693.75. Stock market valuations are stretched, with the forward P/E multiple nearing 24 times earnings.

Real GDP is forecast to increase by around 3% in the third quarter, following a 3.8% growth rate in the second quarter. The Atlanta Fed GDPNow model forecasts real GDP growth of 3.9% in Q3. The New York Fed GDP Nowcast model forecasts 2.5% growth in the third quarter. Real GDP increased at an average rate of 1.6% during the first half of 2025, just below our long-term trend growth estimate of 2%.

This month, we will review our favorite real-time economic indicators:

The Association of American Railroads (AAR) reported that total combined rail traffic increased 3.0% through the initial 38 weeks of 2025 compared to last year. The combined rail traffic figure includes cumulative carload volume up 2.2% and intermodal units up 3.6%. In the most recent reporting week ending September 20th, only two of the ten carload commodity groups posted gains compared to the same week last year.

The American Trucking Associations’ Truck Tonnage Index rose 0.9% in August, following a 1.1% increase in July. This lifted the index to its highest level since December 2023. On a year-over-year basis, the index rose 0.4%. The ATA Economist noted that “housing remains soft, the slowing labor market is likely to show up in consumer spending at some point, and most manufacturing metrics are either decelerating or declining.” Trucking is an excellent barometer of economic activity, representing more than 70% of U.S. goods transported.

The American Staffing Association (ASA) Staffing Index shows that temporary staffing trends have been improving in recent months. The four-week moving average is roughly flat year-over-year, and it appears the long-term slowdown in temp staffing is almost over. We follow temporary staffing levels because short-term staffing changes typically occur before changes in full-time staffing. The ASA Economist observed that “this trajectory suggests that the longstanding staffing slump may soon be fading into our rearview mirror.”

HOUSING MARKET UPDATE

The NAHB/Wells Fargo Housing Market Index (HMI) measures conditions in the single-family housing market. The index was unchanged in September, remaining at a depressed level of 32. HMI Index readings above 50 indicate favorable sentiment among single-family home builders. The current sales conditions index was stable at 34, the measure of sales expectations over the next six months rose two points to 45, and the prospective buyer traffic index declined 1 point to 21. The NAHB Economist noted “the 30-year fixed rate mortgage average is down 23 basis points over the past four weeks to 6.35%, per Freddie Mac. This is the lowest level since mid-October of last year and a positive sign for future housing demand”. Regionally, the Northeast remained the strongest, unchanged at 44. The Midwest rose one point to 42. The South was stable at 29, and the West rose one point to 26.

INFLATION UPDATE

The Fed’s preferred inflation measure is the personal consumption expenditures (PCE) price index. In August, the headline PCE inflation rate was 2.7% year-over-year. The core PCE inflation rate, which excludes the volatile food and energy components, was 2.9% year-over-year. The 3-month annualized core PCE inflation rate was 2.9% and the 6-month annualized core PCE inflation rate was 2.5%. Both headline and core inflation rates remain just above the Fed’s 2% inflation target.

Headline PCE:

+0.3% seasonally adjusted in August, following 0.2% in July

+2.7% year-over-year

+2.9% latest 3 months annualized

+2.2% latest 6 months annualized

Core PCE: (excludes food and energy)

+0.2% seasonally adjusted in August, following 0.2% in July

+2.9% year-over-year

+2.9% latest 3 months annualized

+2.5% latest 6 months annualized

FEDERAL RESERVE UPDATE

The next FOMC Meeting is scheduled for October 28th and 29th. At the September meeting, FOMC members voted 11-1 to lower the fed funds rate 25 basis points to the target range of 4.00% - 4.25%. The Fed policy statement noted that “indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated.” New Fed Governor Miran was the only vote against the monetary policy decision, in favor of a larger 50 basis point rate cut.

In the September 2025 Summary of Economic Projections, FOMC members lowered the central tendency of their December 2025 fed funds forecast range to 3.6% - 4.1%. This indicates anywhere from zero to two rate cuts over the next three months. As you can see in the table below, real GDP forecasts for 2025 were raised slightly, unemployment rate forecasts held steady, and core inflation forecasts rose a little. Examining the dot plot of individual FOMC members’ rate forecasts, the committee is divided, with seven members forecasting no more rate cuts this year and nine members forecasting two more rate cuts by December.

Following the September FOMC meeting, the CME FedWatch Tool is currently expecting rate cuts at the October and December FOMC meetings. For those rate cuts to occur, FOMC members will need to see further weakening in the labor market data. If the labor market stabilizes or improves from its current level, additional rate cuts are unlikely to occur, with inflation above the 2% target level.

MONEY SUPPLY

MODEL PORTFOLIOS UPDATE

In case you missed it, we made some adjustments to our Marketimer model portfolio weightings in last month’s September Update.

Below is the monthly update of the Marketimer and Brinker Fixed Income Advisor Model Portfolios through September 30, 2025.

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“It is sheer madness to live in want in order to be wealthy when you die.”

-Juvenal

COMMENTARY

The S&P 500 Index reached new all-time highs on several occasions in August and has surpassed our target of the low 6,000s. The highest close was achieved on August 28th at 6501.86. The index has increased roughly 5% from its February closing highs. The resilience of the current bull market, which began in October 2022, has been impressive. The S&P 500 currently trades at 24.4 times its current-year earnings estimate of $265.

The Conference Board Leading Economic Index (LEI) fell 0.1% in July, after a 0.3% decline in June. Over the six-month period ending in July 2025, the LEI fell 2.7%, versus the 1.0% decline seen in the prior six months. “The Conference Board does not currently project a recession, though we do expect the economy to weaken in H2 2025, as the negative impacts from tariffs become more visible. Overall, real GDP is projected to grow by 1.6% year-over-year in 2025, before slowing in 2026 to 1.3%.”

Real GDP growth averaged 1.4% during the first half of 2025. The most recent Atlanta Fed GDPNow model forecasts 3.5% real GDP growth in the third quarter, while the New York Fed GDP Nowcast anticipates 2.2% growth.

HOUSING MARKET UPDATE

The NAHB/Wells Fargo Housing Market Index (HMI) measures conditions in the single-family housing market. The HMI index fell one point to 32 in August, returning the index to its lowest level in recent years. HMI Index readings above 50 indicate favorable sentiment among single-family home builders. The current sales conditions index fell one point to 35. The measure of sales expectations over the next six months remained unchanged at 43, and the prospective buyer traffic index increased 2 points to 22. Regionally, the Northeast was the strongest, falling one point to 44. The Midwest rose one point to 42. The South fell one point to 29, and the West was the weakest, declining one point to 24.

INFLATION UPDATE

The Fed’s preferred inflation measure is the personal consumption expenditure (PCE) price index. The most recent PCE report showed that the index increased by 0.2% in July. The core PCE, which excludes the food and energy components, rose 0.3% in July. On a year-over-year basis, headline PCE increased 2.6% and core-PCE increased 2.9% in July.

As shown in the chart below, the headline and core PCE rates have been trending sideways for over a year. The most recent three-month annualized headline PCE inflation rate is 2.6%, and the three-month annualized core-PCE rate is 3.0%. The upcoming September FOMC meeting may be one of the rare occasions when the FOMC lowers the fed funds rate, despite three, six, and twelve month core inflation running above the Fed’s 2% target. We anticipate that the weakening labor market will be used as justification for a rate cut in September.

Headline PCE:

+0.2% seasonally adjusted in July, following 0.3% in June

+2.6% year-over-year

+2.6% latest 3 months annualized

+2.5% latest 6 months annualized

Core PCE: (excludes food and energy)

+0.3% seasonally adjusted in July, following 0.2% in June

+2.9% year-over-year

+3.0% latest 3 months annualized

+3.0% latest 6 months annualized

FEDERAL RESERVE UPDATE

The next Federal Open Market Committee (FOMC) Meeting is scheduled for September 16th and 17th. A 25 basis point rate cut at the September FOMC is likely. The meeting will include an updated Summary of Economic Projections (SEP) from FOMC members. Here is a link to their most recent June 2025 projections. The SEP’s year-end 2025 federal funds rate projection is within the 3.9% to 4.4% range.

CME FedWatch shows an 87% probability of a 25-basis-point rate cut at the September FOMC meeting, with the potential for one additional rate cut in October.

Fed Chair Powell’s four-year term as Fed Chair is set to expire in May 2026. The current favorite to replace him is Fed Governor Christopher Waller, though that may change over the coming months. Fed Governor Kugler resigned in August, opening one spot on the seven-member Board of Governors. Kugler’s term was set to expire in January 2026. President Trump nominated Stephen Miran to fill the vacancy created by Kugler’s unexpected resignation. President Trump and Fed Governor Cook are engaged in a legal dispute to determine whether she will remain on the Board of Governors.

MONEY SUPPLY

MODEL PORTFOLIOS UPDATE

Below is the monthly update of the Marketimer and Brinker Fixed Income Advisor Model Portfolios through August 31, 2025.

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“You make most of your money in a bear market, you just don’t realize it at the time.”

-Shelby Davis

FEDERAL RESERVE UPDATE

The Federal Open Market Committee (FOMC) voted to keep the federal funds target range unchanged at 4.25% to 4.5% at the end of July. The Fed will also continue to reduce its holdings of U.S. Treasury securities and mortgage-backed securities (MBS). In the monetary policy statement, Fed officials noted that “swings in net exports continue to affect the data, recent indicators suggest that growth of economic activity moderated in the first half of the year.”

In the post-meeting press conference, Fed Chair Powell’s prepared remarks reinforced his view that the Fed is ready to cut rates once the incoming data shows inflation is returning toward the Fed’s 2% target level, provided the labor market remains healthy.

“Inflation has eased significantly from its highs in mid-2022 but remains somewhat elevated relative to our 2 percent longer-run goal. Estimates based on the Consumer Price Index and other data indicate that total PCE prices rose 2.5 percent over the 12 months ending in June and that, excluding the volatile food and energy categories, core PCE prices rose 2.7 percent. These readings are little changed from the beginning of the year, although the underlying composition of price changes has shifted: services inflation has continued to ease, while increased tariffs are pushing up prices in some categories of goods. Near-term measures of inflation expectations have moved up, on balance, over the course of this year on news about tariffs, as reflected in both market-based and survey-based measures. Beyond the next year or so, however, most measures of longer-term expectations remain consistent with our 2 percent inflation goal.”

-Fed Chair Powell

The CME FedWatch Tool is pricing in an 80% probability of a rate cut at the September 16th and 17th FOMC meeting. If the labor market weakens or the inflation rate decelerates, the Fed is prepared to cut the fed funds rate.

GROSS DOMESTIC PRODUCT

Real gross domestic product (GDP) increased at a 3.0% annualized rate during the second quarter of 2025, following a -0.5% contraction in the first quarter. During the first half of 2025, real GDP growth averaged 1.25% and over the past year, real GDP has matched our long-term trend growth rate estimate of 2.0%.

Personal consumption expenditures (PCEs) are the most significant component within GDP, representing nearly 70% of the overall GDP figure. During the second quarter, PCEs contributed 1.0% to the overall 3.0% figure, an improvement from their 0.3% contribution in the first quarter. Gross private investment subtracted -3.1%. Net exports contributed 5.0% and government consumption expenditures added 0.1%. View a more detailed real GDP contribution breakdown in Table 2 of the report.

Looking ahead to the third quarter, the Atlanta Fed GDPNow model has an initial forecast of 2.3%. The New York Fed Nowcast estimates third-quarter growth at 2.4%.

HOUSING MARKET

The NAHB/Wells Fargo Housing Market Index (HMI) measures conditions in the single-family housing market. The index rose 1 point from 32 to 33. HMI Index readings above 50 indicate favorable sentiment among single-family home builders. The current sales conditions index rose 1 point to 36, the measure of sales expectations over the next six months increased 3 points to 43, and the prospective buyer traffic index fell 1 point to 20. The July survey showed a record 38% of builders are cutting prices. The NAHB Chief Economist noted “Single-family housing starts will post a decline in 2025 due to ongoing housing affordability challenges”. Regionally, the Northeast remained the strongest, rising 2 points to 45. The Midwest was unchanged at 41. The South fell 3 points to 30, and the West remains the weakest, falling 3 points to 25.

INFLATION UPDATE

The Fed’s preferred inflation measure is the personal consumption expenditure (PCE) price index. The most recent PCE report showed that the index increased by 0.3% in June. The core PCE, which excludes the food and energy components, also rose 0.3% in June. On a year-over-year basis, headline PCE increased 2.6% and core-PCE increased 2.8% in June.

As shown in the chart below, the headline and core PCE rates have been moving mostly sideways for over a year now. The most recent three-month annualized headline PCE inflation rate is 2.5%, and the three-month annualized core-PCE rate is 2.6%. Most FOMC members are prepared to lower the fed funds rate as soon as the three-month annualized inflation rate decelerates toward the Fed’s 2.0% inflation target.

Headline PCE:

+0.3% seasonally adjusted in June, following 0.2% in May

+2.6% year-over-year

+2.5% latest 3 months annualized

+2.9% latest 6 months annualized

Core PCE: (excludes food and energy)

+0.3% seasonally adjusted in June, following 0.2% in May

+2.8% year-over-year

+2.6% latest 3 months annualized

+3.2% latest 6 months annualized

MONEY SUPPLY

Below is the monthly update of the Marketimer and Brinker Fixed Income Advisor Model Portfolios through July 31, 2025

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During the first week of July, the fiscal spending bill was signed into law and the debt ceiling was increased by $5 trillion. The increase in deficit spending means the supply of treasuries will rise over the coming quarters. Treasury Secretary Bessent is likely to increase the supply of treasury bills. Through the initial nine months of fiscal year 2025 (ending September 30th, 2025), the budget deficit totaled $1.3 trillion, an increase of $65 billion compared to the same period last year. Tax receipts increased $254 billion and spending outlays rose $320 billion.

U.S. TREASURY AUCTIONS

The U.S. Treasury has a full schedule of upcoming auctions. Investors can purchase treasuries at no cost using the TreasuryDirect.gov website or at most major brokerages, including Vanguard, Fidelity, and Schwab.

BILLS

BONDS

Treasury Inflation-Protected Securities (TIPS)

The current 10-year TIPS yield is 2.01% (+ CPI).

MONEY MARKET & CD RATES

Below are some of the most attractive money market yields and CD rates available nationwide, sorted by maturities from three months to five years. Click here to see if a bank is FDIC-insured. You can click on the institution name in the list below to go directly to the bank’s website for more information regarding CD purchase minimums, etc. We always recommend individual CD purchases be limited to within the $250,000 FDIC insurance limit.

Money Market Funds:

• Vanguard Federal Money Market Fund (VMFXX) 4.21%

• Vanguard Municipal Money Market Fund (VMSXX) 1.73% (tax-exempt)

• Fidelity Money Market Fund (SPRXX) 4.01%

• Schwab Value Advantage Money Fund (SWVXX) 4.13%

The tax-equivalent yield from VMSXX is lower than the VMFXX yield, making VMFXX the more attractive option. Below is a tax-equivalent yield comparison of VMFXX versus VMSXX:

CDs

3-months:

• Popular Direct 4.40%

• Brilliant Bank 4.35%

• Ivy Bank 4.35%

6-months:

• Northern Bank Direct 4.60%

• Seattle Bank 4.60% (9 months)

• able Banking 4.50%

• Total Bank 4.41%

12-months:

• My eBanc 4.45% ($50k minimum)

• NexBank 4.40%

• Popular Direct 4.40%

18-months:

• My eBanc 4.30% ($50k minimum)

• Sallie Mae 4.30% (15 months)

• Popular Direct 4.26%

2-years:

• My eBanc 4.20% ($50k minimum)

• Popular Direct 4.20%

• Sallie Mae 4.10%

3-years:

• Popular Direct 4.25%

• Total Bank 4.00%

• Synchrony Bank 4.00%

4-years:

• Popular Direct 4.15%

• Prime Alliance Bank 4.00%

• First National Bank of America 3.91%

5-years:

• Popular Direct 4.20%

• Synchrony Bank 4.15%

• Sallie Mae 4.00%

MUNICIPAL BOND AUCTIONS

Below is a list of some of the largest upcoming municipal bond offerings nationwide:

Source: EMMA, BondLink

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In case you missed it, here is our Model Portfolio Update published earlier this month.

“Sometimes the best thing to do is to do nothing. The hardest thing to do is to sit with cash. It is very boring.”

-Lou Simpson

COMMENTARY

The S&P 500 achieved a new all-time record high on June 30th when it closed at 6204.95, one percent above the record high of 6144.15 set on February 19th. The rally from the April low has been impressive, taking the S&P all the way back to the low 6000s level from the start of the year. The challenge now, as it was six months ago, is that stock valuations are elevated, with the P/E multiple exceeding 23.4 times calendar-year 2025 earnings.

Real GDP is forecast to rebound in the second quarter following the -0.5% contraction seen in the first quarter. A significant increase in imports, which subtract from GDP, caused the decline in GDP in the first quarter. The Atlanta Fed GDPNow model forecasts real GDP growth of 2.9% in Q2, which would bring the year-to-date average quarterly GDP estimate up to 1.3% for the first six months of 2025. The New York Fed GDP Nowcast model forecasts 1.7% growth in the second quarter.

This month, we will review our favorite real-time economic indicators:

The Association of American Railroads (AAR) reported that total combined rail traffic increased 4.1% through the first 25 weeks of 2025 compared to last year. The combined rail traffic figure includes cumulative carload volume up 2.5% and intermodal units up 5.4%. In the most recent reporting week ending June 21st, seven of the ten carload commodity groups posted increases compared to the same week last year.

The American Trucking Associations’ Truck Tonnage Index fell 0.1% in May, following a 0.5% increase in April. On a year-over-year basis, the index declined 1.3%, marking the first year-over-year decline this year. Trucking is an excellent barometer of economic activity, representing more than 70% of U.S. goods transported. A recovery in the goods sector appears to be underway.

The American Staffing Association (ASA) Staffing Index shows that staffing trends are holding steady through June. The four-week moving average is 5.6% lower year-over-year. We follow temporary staffing levels because short-term staffing changes typically occur before changes in full-time staffing. Temporary staffing has shown more weakness than unemployment insurance claims, nonfarm payrolls, and unemployment for more than 18 months.

HOUSING MARKET UPDATE

The NAHB/Wells Fargo Housing Market Index (HMI) measures conditions in the single-family housing market. The index fell 2 points in June from 34 to 32, to depressed levels rarely seen. HMI Index readings above 50 indicate favorable sentiment among single-family home builders. The current sales conditions index fell 2 points to 35, the measure of sales expectations over the next six months dropped 2 points to 40, and the prospective buyer traffic index declined 2 points to 21. The NAHB Chief Economist noted “Rising inventory levels and prospective home buyers who are on hold waiting for affordability conditions to improve are resulting in weakening price growth in most markets and generating price declines for resales in a growing number of markets”. Regionally, the Northeast remained the strongest, falling 1 point to 43. The Midwest rose 1 point to 41. The South fell 3 points to 33, and the West remains the weakest, falling 4 points to 28. The homebuilder index has only been lower twice since 2012.

INFLATION UPDATE

The Fed’s preferred inflation measure is the personal consumption expenditures (PCE) price index. In May, the headline PCE inflation rate was 2.3% year-over-year. The core PCE inflation rate, which excludes the volatile food and energy components, was 2.7% year-over-year. The 3-month annualized core PCE inflation rate decelerated to 1.7% annualized and the 6-month annualized core PCE inflation rate rose to 2.9%. FOMC members will be watching the 3-month and 6-month core PCE figures very closely over the coming months to see if inflation is moving sustainably toward their 2% inflation target. If the June and July inflation readings are data-friendly, one or two additional fed funds rate cuts are expected.

Headline PCE:

+0.1% seasonally adjusted in May, following 0.1% in April

+2.3% year-over-year

+1.1% latest 3 months annualized

+2.8% latest 6 months annualized

Core PCE: (excludes food and energy)

+0.2% seasonally adjusted in May, following 0.1% in April

+2.7% year-over-year

+1.7% latest 3 months annualized

+2.9% latest 6 months annualized

FEDERAL RESERVE UPDATE

The next FOMC Meeting is scheduled for July 29th and 30th. At the June meeting, FOMC members unanimously voted to keep the fed funds rate unchanged at the 4.25% to 4.5% target range. The Fed policy statement noted that “swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated.”

In the June 2025 Summary of Economic Projections, FOMC members maintained their December 2025 fed funds forecast range between 3.9% and 4.4%. This indicates anywhere from zero to two rate cuts over the next six months. As you can see in the table below, real GDP forecasts for 2025 were lowered, unemployment rate forecasts increased, and inflation forecasts rose. Looking at the dot-plot of individual FOMC members’ rate forecasts, the committee is evenly divided with seven members forecasting no rate cuts and eight members forecasting two rate cuts.

Following the June FOMC meeting, the CME FedWatch Tool is currently showing the next fed funds rate cut occurring at the September 17th meeting.

Congress is working to pass a fiscal spending bill that includes lifting the debt ceiling by $5 trillion. The existing debt ceiling is $36.1 trillion, and Treasury Secretary Bessent has said the limit needs to be raised as soon as August. According to the latest CBO figures, the federal budget deficit reached $1.4 trillion through the initial eight months of fiscal year 2025, or $160 billion more than the same period last year. Tax receipts were up $196 billion and expenditures were up $357 billion year-over-year.

MONEY SUPPLY

MODEL PORTFOLIOS UPDATE

Below is the monthly update of the Marketimer and Brinker Fixed Income Advisor Model Portfolios through June 30, 2025.

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"There is a time to go long, a time to go short, and a time to go fishing."

- Jesse Livermore

COMMENTARY

The S&P 500 Index has rallied impressively from its April low achieved during the initial wave of selling triggered by the ongoing trade policy changes. The index ended the month of May at the 5911.69 level, down -3.8% from the all-time closing high level of 6144.15 achieved 100 days earlier on February 19th.

Earnings revisions have lowered the S&P 500’s second-quarter estimated earnings from $65.55 to $62.91, according to FactSet. For calendar year 2025, FactSet estimates S&P 500 earnings to be just below $265, down approximately $9 from $274 at the beginning of the year. Despite the decline in earnings estimates, the stock market remains at the same levels it was trading at six months ago. At the close on Friday, May 30th, the S&P 500 was trading at 22.3 times the 2025 earnings estimate.

During the five month period from January through May 2025, the Vanguard Total Stock Market Fund (Symbol: VTSAX) has a total return of 0.5%, the Vanguard Total Bond Market Fund (Symbol: VTBLX) has a total return of 2.5%, and the Vanguard Federal Money Market Fund (Symbol: VMFXX) has a total return of 1.8%.

According to the Investment Company Institute (ICI), money market assets have remained stable this year, hovering around the $6.95 trillion level. This figure includes $2.87 trillion in retail accounts and $4.08 trillion in institutional accounts. Money market fund yields are relatively attractive, earning around 4.25%.

The Conference Board Leading Economic Index (LEI) fell 1.0% in April, after a 0.8% decline in March. Over the six-month period ending in April 2025, the LEI fell 2.0%, the same pace of decline as seen in the prior six months. “Widespread weaknesses were also present when looking at six-month trends among the LEI’s components, resulting in a warning signal for growth. However, while the six-month growth rate of the LEI went deeper into negative territory, it did not fall enough to trigger the recession signal.” Despite the negative readings, the Conference Board forecasts real GDP growth of 1.6% in 2025. The Conference Board CEO Confidence measure also fell in April, to the lowest level since the fourth quarter of 2022. It was the largest quarter-over-quarter decline in the survey’s history, dating back to 1976.

HOUSING MARKET UPDATE

The NAHB/Wells Fargo Housing Market Index (HMI) measures conditions in the single-family housing market. The HMI index weakened in May, falling six points from 40 to 34, sinking to the lowest level since November 2023. HMI Index readings above 50 indicate favorable sentiment among single-family home builders. The current sales conditions index fell eight points to 37. The measure of sales expectations over the next six months dropped one point to 42. And, the prospective buyer traffic index declined 2 points to 23. The NAHB Chief Economist noted, “the overwhelming majority of survey responses came before the tariff reduction announcement with China. Builders expect future trade negotiations and progress on tax policy will help stabilize the economic outlook and strengthen housing demand.” Regionally, the Northeast was the strongest, falling 3 points to 44. The Midwest fell 1 point to 40. The South fell 2 points to 37. The West was the weakest, falling two points to 33. We think the recent uptick in longer-term interest rates will be an additional headwind to the housing market this summer.

The latest Housing Market Update published by Redfin indicates that we are currently in a buyer's market, with 34% more sellers in the market than buyers. Redfin forecasts home prices will decline by 1% by year-end. The number of home sellers has returned to levels not seen since March 2020, and the number of buyers is at the lowest level in their limited dataset, which goes back to 2013.

INFLATION UPDATE

The Fed’s preferred inflation measure is the personal consumption expenditures (PCE) price index. In April, the headline PCE inflation rate was 2.1% year-over-year. The core PCE inflation rate, which excludes the volatile food and energy components, was 2.5% year-over-year. The 3-month annualized core PCE inflation rate was 2.7% and the 6-month annualized core PCE inflation rate was 2.6%. Most FOMC members want to see the 3-month and 6-month core PCE inflation figures move slightly lower toward the 2% target level before lowering the fed funds rate again.

Headline PCE:

+0.1% seasonally adjusted in April, following 0.0% in March

+2.1% year-over-year

+2.1% latest 3 months annualized

+2.6% latest 6 months annualized

Core PCE: (excludes food and energy)

+0.1% seasonally adjusted in April, following 0.1% in March

+2.5% year-over-year

+2.7% latest 3 months annualized

+2.6% latest 6 months annualized

FEDERAL RESERVE UPDATE

The next Federal Open Market Committee (FOMC) Meeting is scheduled for June 17th and 18th. The meeting will include an updated Summary of Economic Projections (SEP) from FOMC members. Here is a link to their most recent March 2025 projections. We will be looking to see if the central tendency of the year-end 2025 federal funds rate projection is unchanged or slightly higher than the 3.9% to 4.4% range. We do not anticipate any monetary policy change at the June meeting.

CME FedWatch probabilities show a greater than 90% expectation of no change to the fed funds rate at the June meeting.

MONEY SUPPLY

MODEL PORTFOLIOS UPDATE

Below is the monthly update of the Marketimer and Brinker Fixed Income Advisor Model Portfolios through May 31, 2025.

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“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

-Mark Twain

COMMENTARY

According to the advance GDP report, real gross domestic product (GDP) decreased at a -0.3% annual rate in the first quarter of 2025, following a 2.4% pace of growth in the fourth quarter of 2024. During the previous four quarters, real GDP growth averaged 2.1%, close to our long-term 2% trend growth rate estimate.

Personal consumption expenditures (PCEs) are the most significant component within the GDP report, representing nearly 70% of total GDP. During the first quarter, PCEs contributed 1.2% to the overall GDP figure, as consumer spending decelerated from the heightened pace seen in the prior quarter. Gross private investment added 3.6%, reversing the fourth-quarter’s -1.0% figure. Net exports were deeply negative, subtracting -4.8% from GDP, and government consumption expenditures subtracted -0.25%. View a more detailed GDP contribution breakdown in Table 2 of the GDP report. The dramatic changes to USA trade policy will have a major impact on GDP this year, as businesses and consumers adjust their behavior.

This month we are updating our key indicators that measure the risk of recession. These include: (1) accelerating inflation; (2) payroll growth; (3) inverted yield curve; (4) rising unemployment claims; and (5) the Leading Economic Index.

Accelerating Inflation: Year-over-year inflation figures remain above the Fed’s 2% target level, and recent trade policy changes may keep inflation elevated into the summertime. Fed Chair Powell has indicated most FOMC members are comfortable holding the fed funds rate steady, adopting a wait-and-see approach to future monetary policy decisions. See the full inflation report in more detail below.

Payroll Growth: The unemployment rate in the March labor report was 4.2%. The rate has been steady within a narrow range of 4.0% to 4.2% since May 2024. Total nonfarm payrolls rose 228k in March, higher than the 12-month average gain of 158k. The healthy pace of job growth allows the Fed to focus on its goal of lowering the pace of inflation to its 2% target level.

Inverted Yield Curve: The yield curve measures the current yield on Treasuries over the range of maturities. The yield curve’s slope shows the term structure of rates and indicates the economy’s health. Term structure refers to the interest rates of similar bonds across the maturity spectrum. An ascending yield curve indicates investors expect rates to increase with economic growth. We focus on the yield curve measure included in the Leading Economic Index to determine whether there is an inversion, and we watch for inversions that persist for at least six months. As we enter May, the effective federal funds rate is 4.33% and the 10-year Treasury yield is 4.17%, resulting in a slightly inverted yield curve of -16 basis points.

Rising Unemployment Claims: Weekly unemployment insurance claims have been relatively stable, hovering near record lows around 220,000. This is impressive considering the growth in the labor force over time. Given our nation’s aging demographics and a reduction in immigration, labor market conditions may remain relatively tight for the foreseeable future. These conditions increase the re­solve of employers to retain productive workers. The March JOLTS report showed that the quits rate was 2.1% and there were 7.2 million job openings, down about 901,000 from a year ago.

Leading Economic Index: The Conference Board Leading Economic Index (LEI) declined 0.7% in March, after a 0.2% decline in February. Over the six-month period ending in March 2025, the LEI fell 1.2%, an improvement from its 2.3% decline over the prior six months. “March’s decline was concentrated among three components that weakened amid soaring economic uncertainty ahead of pending tariff announcements: 1) consumer expectations dropped further, 2) stock prices recorded their largest monthly decline since September 2022, and 3) new orders in manufacturing softened.” Despite the negative readings, the Conference Board forecasts real GDP growth of 1.6% in 2025.

INFLATION UPDATE

The Fed’s preferred inflation measure is the personal consumption expenditures (PCE) price index. In March, the headline PCE inflation rate was 2.3% year-over-year. The core PCE inflation rate, which excludes the volatile food and energy components, was 2.6% year-over-year. The 3-month annualized core PCE inflation rate was 3.5% annualized and the 6-month annualized core PCE inflation rate was 3.0%. Most FOMC members want to see the 3-month and 6-month core PCE inflation figures move lower toward the 2% target level before lowering the fed funds rate again. The recent uptick in these inflation measures has put rate cuts on hold.

Headline PCE:

+0.0% seasonally adjusted in March, following 0.4% in February

+2.3% year-over-year

+3.1% latest 3 months annualized

+2.9% latest 6 months annualized

Core PCE: (excludes food and energy)

+0.0% seasonally adjusted in March, following 0.5% in February

+2.6% year-over-year

+3.5% latest 3 months annualized

+3.0% latest 6 months annualized

HOUSING MARKET UPDATE

The NAHB/Wells Fargo Housing Market Index (HMI) measures conditions in the single-family housing market. The index rose one point in April from 39 to 40, pausing its decline from 47 in January. HMI Index readings above 50 are indicative of favorable single-family home builder sentiment. The current sales conditions index rose two points to 45, the measure of sales expectations over the next six months dropped four points to 43, and the prospective buyer traffic index rose one point to 25. The NAHB Chief Economist noted that “builders have expressed growing uncertainty over market conditions as tariffs have increased price volatility for building materials at a time when the industry continues to grapple with labor shortages and a lack of buildable lots.” Regionally, the Northeast fell 7 points to 47. The South fell three points to 39. The Midwest fell one point to 41, and the West fell two points to 35.

FEDERAL RESERVE UPDATE

The Federal Open Market Committee (FOMC) is scheduled to meet next week on May 6th and 7th. As of this writing, there is a greater than 90% probability that rates remain unchanged at the meeting, according to CME FedWatch. Investors anticipate that another rate cut will come at the June 18th FOMC meeting. That could happen, but there has been little indication from Fed Chair Powell that another rate cut is imminent. At recent media events, Chair Powell has emphasized that FOMC members are comfortable with their current policy stance and will likely wait for the incoming inflation data to improve before lowering the federal funds rate again. It would take a rapid deterioration in the labor market figures for the Fed to lower rates while inflation remains elevated.

MONEY SUPPLY

MODEL PORTFOLIOS UPDATE

Below is the monthly update of the Marketimer and Brinker Fixed Income Advisor Model Portfolios through April 30, 2025.

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The S&P 500 Index declined 17.4% from its all-time closing high of 6144.15 on February 19th to a closing level of 5074.08 on Friday, April 4th. The decline this past week was accelerated by monumental changes to U.S. trade policy. The Nasdaq Composite index has fallen even more, dropping 22.7% from its December 16th closing high.

As early as fall 2024, the Marketimer stock market timing model began raising warning signals. We watched and waited for a health-restoring correction that never arrived, leaving the market exposed to a more significant decline.

Given these signals, we began implementing the following defensive measures:

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“The only thing you can be sure of is that there are times when large numbers of stocks are priced too high and other times when they're priced too low.”

- Benjamin Graham

COMMENTARY

The S&P 500 has declined 9% from its all-time high achieved on February 19th through its March 31st close at 5811.85. The S&P 500 currently trades around the same level as it did nine months ago in July 2024. The selloff has been more severe in the tech-weighted Nasdaq Composite, which has declined 14% from its all-time high made in December 2024. Investors have shown little interest in purchasing stocks, despite an aggregate of $7 trillion in money market assets at the end of March.

Investors are growing increasingly concerned about an economic slowdown and a rise in inflationary pressures. The Atlanta Fed is publishing an alternate GDPNow real GDP forecast of -0.5% for the first quarter, making adjustments for imports and exports of gold (explanation here). The New York Fed’s GDP Nowcast estimates first-quarter real GDP growth at +2.9%.

The Association of American Railroads (AAR) reported US railroads saw total combined rail traffic increase 4.2% through the first 12 weeks of 2025 compared to last year. The combined rail traffic figure includes cumulative carload volume down 0.6% and intermodal units up 8.2%. In the most recent reporting week, nine of the ten carload commodity groups posted increases compared to the same week last year. Forest products were the only commodity group to post a year-over-year decline.

The American Trucking Associations’ Truck Tonnage Index rose 3.0% in February, following a 0.1% increase in January. On a year-over-year basis, the index rose 0.6%. Trucking is an excellent barometer of economic activity, representing more than 70% of U.S. goods transported. A recovery in the goods sector appears to be underway.

The American Staffing Association (ASA) Staffing Index shows that staffing trends are holding steady, although the four-week moving average is 7.4% lower year-over-year. We follow temporary staffing levels because short-term staffing changes typically occur before changes in full-time staffing. Temporary staffing has shown more weakness than unemployment insurance claims, nonfarm payrolls, and unemployment for more than a year.

HOUSING MARKET UPDATE

The NAHB/Wells Fargo Housing Market Index (HMI) measures conditions in the single-family housing market. The index fell 3 points in March from 42 to 39, declining rapidly over two months to the lowest level in seven months. HMI Index readings above 50 are indicative of favorable single-family home builder sentiment. The current sales conditions index fell 3 points to 43, the measure of sales expectations over the next six months was unchanged at 47, and the prospective buyer traffic index declined 5 points to 24. The NAHB Chief Economist noted “that builders estimate a typical cost effect from recent tariff actions at $9,200 per home. Uncertainty on policy is also having a negative impact on home buyers and development decisions.” Regionally, the Northeast remained the strongest, falling 3 points to 54. The South fell 4 points to 42. The Midwest fell 3 points to 42, and the West remains the weakest, falling 2 points to 37. The homebuilder index has fallen back to its 2024 low and is just above its 2023 low.

INFLATION UPDATE

The Fed’s preferred inflation measure is the personal consumption expenditures (PCE) price index. In February, the headline PCE inflation rate was 2.5% year-over-year. The core PCE inflation rate, which excludes the volatile food and energy components, was 2.8% year-over-year in February. The 3-month annualized core PCE inflation rate jumped to 3.6% annualized and the 6-month annualized core PCE inflation rate rose to 3.1%. The reacceleration in the pace of core PCE inflation above 3% will keep the FOMC on hold unless the labor market deteriorates significantly.

Headline PCE:

+0.3% seasonally adjusted in February, following 0.3% in January

+2.5% year-over-year

+3.9% latest 3 months annualized

+3.1% latest 6 months annualized

Core PCE: (excludes food and energy)

+0.4% seasonally adjusted in February, following 0.3% in January

+2.8% year-over-year

+3.6% latest 3 months annualized

+3.1% latest 6 months annualized

FEDERAL RESERVE UPDATE

The next FOMC Meeting is scheduled for May 6th and 7th. At the March meeting, FOMC members voted to keep the fed funds rate unchanged at the 4.25% to 4.5% target range. The Fed also voted to slow the pace of quantitative tightening (QT), which decreases the overall size and scope of the Fed’s balance sheet. “The Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage‑backed securities. Beginning in April, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $25 billion to $5 billion. The Committee will maintain the monthly redemption cap on agency debt and agency mortgage-backed securities at $35 billion.”

In the March 2025 Summary of Economic Projections, FOMC members raised their forecasts for the fed funds rate at year-end 2025. The central tendency increased from a range of 3.6%-4.1% to a range of 3.9% to 4.4%. This indicates anywhere from zero to two rate cuts between now and year-end. As you can see in the table below, real GDP forecasts for 2025 were lowered, unemployment rate forecasts increased, and inflation forecasts rose.

MONEY SUPPLY

MODEL PORTFOLIOS UPDATE

Below is the monthly update of the Marketimer and Brinker Fixed Income Advisor Model Portfolios through March 31, 2025.

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Here are a few thoughts on last week’s fiscal policy actions. Congress passed a continuing resolution (CR) spending bill to fund federal government spending through the end of the fiscal year (September 30th), avoiding a government shutdown. The bill did not include an increase or suspension of the debt ceiling. Treasury can use extraordinary measures for a few months, but the debt ceiling will need to be dealt with by summertime. A recent speech by Roberto Perli, NY Fed Manager of the System Open Market Account, made this balance sheet observation:

“Put simply, the longer balance sheet runoff continues while the debt ceiling situation persists, the higher the risk that, upon the resolution of the debt ceiling, reserves could rapidly decline to levels that could result in considerable volatility in money markets. As noted in the minutes of the January 2025 FOMC meeting, various participants thought it may be appropriate to consider pausing or slowing balance sheet runoff until the resolution of the debt ceiling situation.^”

It appears increasingly likely that the Fed will be slowing down its quantitative tightening (QT) program soon, which shrinks the overall size of the Fed’s balance sheet. We would like to see the Fed alter the QT program to shift its focus toward reducing its mortgage-backed securities (MBS) portfolio rather than its U.S. Treasury holdings.

We do not expect any change to the federal funds rate at this week’s FOMC meeting. The meeting will include an updated Summary of Economic Projections (SEP) published on Wednesday, March 19th.

U.S. TREASURY AUCTIONS

U.S. Treasury has a full schedule of upcoming auctions. Investors can purchase treasuries at no cost using the TreasuryDirect.gov website or at most major brokerages including Vanguard, Fidelity, and Schwab.

BILLS

NOTES

BONDS

Treasury Inflation-Protected Securities (TIPS)

The current 10-year TIPS yield is 2.00% (+ CPI).

Floating Rate Notes (FRNs)

Floating Rate Notes explained here.

MONEY MARKET & CD RATES

Below are some of the most attractive money market yields and CD rates available nationwide, sorted by maturities from three months to five years. Click here to see if a bank is FDIC-insured. You can click on the institution name in the list below to go directly to the bank’s website for more information regarding CD purchase minimums, etc. We always recommend individual CD purchases be limited to within the $250,000 FDIC insurance limit.

Money Market Funds:

• Vanguard Federal Money Market Fund (VMFXX) 4.23%

• Vanguard Municipal Money Market Fund (VMSXX) 3.13% (tax-exempt)

• Fidelity Money Market Fund (SPRXX) 4.02%

• Schwab Value Advantage Money Fund (SWVXX) 4.15%

Below is a tax-equivalent yield comparison of VMFXX versus VMSXX:

CDs

3-months:

• Brilliant Bank 4.60%

• Bask Bank 4.50%

• Ivy Bank 4.35%

6-months:

• Mutual One Bank 4.59%

• My eBanc 4.55% ($50k minimum)

• Total Bank 4.51%

12-months:

• Marcus by Goldman Sachs 4.50% (14-month)

• Total Bank 4.41%

• My eBanc 4.40% ($50k minimum)

• NexBank 4.40%

18-months:

• My eBanc 4.35% ($50k minimum)

• Brilliant Bank 4.35% (15 months)

• TAB Bank 4.16%

2-years:

• My eBanc 4.25% ($50k minimum)

• Total Bank 4.21%

• Popular Direct 4.15%

3-years:

• Total Bank 4.16%

• Popular Direct 4.10%

• First National Bank of America 4.10%

4-years:

• Popular Direct 4.00%

• First National Bank of America 4.00%

• TAB Bank 3.86%

5-years:

• Popular Direct 4.15%

• Synchrony Bank 4.15%

• Total Bank 4.11%

MUNICIPAL BOND AUCTIONS

Below is a list of some of the largest upcoming municipal bond offerings nationwide:

Source: EMMA

CONSUMER PRICE INDEX (CPI) | JANUARY 2024

The latest CPI inflation report showed that headline CPI inflation increased 0.2% in February and is up 2.8% year over year. The core CPI, which excludes the volatile food and energy components, rose 0.2% in February and is up 3.1% year over year. These inflation figures remain too high for the FOMC to lower the federal funds rate. We expect no change to the federal funds rate at the upcoming FOMC meeting on March 18th and 19th.

Headline CPI:

+0.2% seasonally adjusted in February, following +0.5% in January

+2.8% year-over-year

Core CPI: (excludes food and energy)

+0.2% seasonally adjusted in February, following +0.4% in January

+3.1% year-over-year

Median and 16% trimmed-mean CPI from Cleveland Fed:

Median +0.3% in February and +3.5% YoY

16% trimmed-mean +0.3% in February and +3.1% YoY

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In case you missed it, here is our Model Portfolio Update published earlier this month.

“Capital goes where it is welcome and stays where it is well treated.”

-Walter Wriston

COMMENTARY

The S&P 500 has been oscillating around the 6000 level since November. The S&P 500 closed at 5954.40 at the end of February, which is -3.1% from its all-time closing high level of 6144.15 achieved on February 19th. As in January, the S&P 500 made two new closing highs on back-to-back trading days during February, barely above the prior month’s closing high. Again, these new highs were immediately met with increased selling pressure. Below is a list of the ten highest S&P 500 closing levels, all occurring over the past three months. The bolded figures identify the closing highs achieved in December, January, and February. As you can see, all of the closing highs from early December through the end of February are within a narrow 1% range.

Money Market Assets climbed to $6.97 trillion in late February, including $2.81 trillion in retail accounts. Here is a link to our recent post highlighting the most attractive money market and CD rates. We publish a mid-month update with the best rates available nationwide every month.

HOUSING MARKET UPDATE

The NAHB/Wells Fargo Housing Market Index (HMI) measures conditions in the single-family housing market. The index fell 5 points in February from 47 to 42. HMI Index readings above 50 are indicative of favorable single-family home builder sentiment. The current sales conditions index fell 4 points to 46, the measure of sales expectations over the next six months dropped 13 points to 46, and the prospective buyer traffic index declined 3 points to 29. The NAHB Chief Economist noted, “With 32% of appliances and 30% of softwood lumber coming from international trade, uncertainty over the scale and scope of tariffs has builders further concerned about costs.” Regionally, the Northeast remained the strongest, falling 3 points to 57. The South held steady at 46. The Midwest fell 2 points to 45, and the West remained the weakest, falling one point to 39. Unfortunately, much of the recovery in the homebuilder index since the August 2024 low was erased in February.

INFLATION UPDATE

The Fed’s preferred inflation measure is the personal consumption expenditures (PCE) price index. In January, the headline PCE inflation rate was 2.5% year-over-year. The core PCE inflation rate, which excludes the volatile food and energy components, was 2.6% year-over-year in January. The 3-month annualized core PCE inflation rate has decelerated from 2.9% to 2.4% over the past few months; however, the 6-month annualized core PCE inflation rate increased from 2.4% to 2.6%. The 3-month, 6-month, and 12-month core PCE inflation rates remain roughly one-half percent above the Fed’s 2% inflation target. FOMC members want inflation to decelerate before lowering the fed funds rate again.

Headline PCE:

+0.3% seasonally adjusted in January, following 0.3% in December

+2.5% year-over-year

+2.9% latest 3 months annualized

+2.6% latest 6 months annualized

Core PCE: (excludes food and energy)

+0.3% seasonally adjusted in January, following 0.2% in December

+2.6% year-over-year

+2.4% latest 3 months annualized

+2.6% latest 6 months annualized

FEDERAL RESERVE UPDATE

The next FOMC Meeting is scheduled for March 18th and 19th. The meeting will include an updated Summary of Economic Projections (SEP) from FOMC members. Here is a link to their most recent December 2024 projections. We will be looking to see if the central tendency of the year-end 2025 federal funds rate projection is unchanged or slightly higher than the 3.6% to 4.1% range. We do not anticipate any monetary policy change at the March meeting. CME FedWatch probabilities show a greater than 90% expectation of no change to the fed funds rate.

MONEY SUPPLY

MODEL PORTFOLIOS UPDATE

Below is the monthly update of the Marketimer and Brinker Fixed Income Advisor Model Portfolios through February 28, 2025.

Read more

U.S. Treasury has a full schedule of upcoming auctions. Investors can purchase treasuries at no cost using the TreasuryDirect.gov website or at most major brokerages including Vanguard, Fidelity, and Schwab.

BILLS

NOTES

BONDS

Treasury Inflation-Protected Securities (TIPS)

The current 30-year TIPS yield is 2.35% (+ CPI).

Floating Rate Notes (FRNs)

Floating Rate Notes explained here.

MONEY MARKET & CD RATES

Below are some of the most attractive money market yields and CD rates available nationwide, sorted by maturities from three months to five years. Click here to see if a bank is FDIC-insured. You can click on the institution name in the list below to go directly to the bank’s website for more information regarding CD purchase minimums, etc. We always recommend individual CD purchases be limited to within the $250,000 FDIC insurance limit.

Money Market Funds:

• Vanguard Federal Money Market Fund 4.25%

• Vanguard Municipal Money Market Fund 3.05% (tax-exempt)

• Fidelity Money Market Fund 4.05%

• Schwab Value Advantage Money Fund 4.18%

CDs

3-months:

• Brilliant Bank 4.60%

• Total Bank 4.51%

• Quontic Bank 4.50%

6-months:

• Mutual One Bank 4.59%

• My eBanc 4.55% ($50k minimum)

• Total Bank 4.51%

12-months:

• Total Bank 4.50%

• My eBanc 4.40% ($50k minimum)

• NexBank 4.40%

18-months:

• My eBanc 4.35% ($50k minimum)

• Brilliant Bank 4.35% (15 months)

• Popular Direct 4.15%

2-years:

• Flagstar Bank 4.25%

• My eBanc 4.25% ($50k minimum)

• Popular Direct 4.20%

3-years:

• Popular Direct 4.15%

• First National Bank of America 4.10%

• Marcus by Goldman Sachs 4.10%

4-years:

• Popular Direct 4.05%

• First National Bank of America 4.00%

• TAB Bank 3.86%

5-years:

• Popular Direct 4.20%

• Synchrony Bank 4.15%

• First National Bank of America 3.96%

MUNICIPAL BOND AUCTIONS

Below is a list of some of the largest upcoming municipal bond offerings nationwide:

Source: EMMA, BondLink

CONSUMER PRICE INDEX (CPI) | JANUARY 2024

The latest CPI inflation report showed that headline CPI inflation increased 0.5% in January and is up 3.0% year over year. The core CPI, which excludes the volatile food and energy components, rose 0.4% in January and is up 3.3% year over year. These inflation figures remain too high for the FOMC to lower the federal funds rate, in our view. We expect no monetary policy change at the upcoming FOMC meeting on March 18th and 19th.

Headline CPI:

+0.5% seasonally adjusted in January, following +0.4% in December

+3.0% year-over-year

Core CPI: (excludes food and energy)

+0.4% seasonally adjusted in January, following +0.2% in December

+3.3% year-over-year

Median and 16% trimmed-mean CPI from Cleveland Fed:

Median +0.3% in January and +3.6% YoY

16% trimmed-mean +0.4% in January and +3.1% YoY

Following the stronger than expected inflation figures this week, FOMC rate cuts have been pushed back into the second half of 2025 per CME FedWatch:

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In case you missed it, here is our Model Portfolio Update published earlier this month.