Hello, YieldAlley readers! In this issue:

• Is It Still a Good Time to Buy T-Bills and Bonds?

• All Eyes on Fed's Upcoming Rate Decision

• Why credit card fraud alerts are rising, and how worried you should be about them.

• And more!

NEWS

Standout Stories

🛒 Amazon hikes wages for contract delivery drivers as union pressures grow (CNBC)

💳 Why credit card fraud alerts are rising, and how worried you should be about them (CNBC)

🤖 OpenAI Announces a New AI Model, Code-Named Strawberry, That Solves Difficult Problems Step by Step (Wired)

🖥️ Nvidia CEO Jensen Huang: 'Everybody is counting on us' (Yahoo Finance)

🏡 Nearly half of US renters spend more than 30% of their income on housing costs (CNN)

MARKET THOUGHTS

Stocks Rebound as Inflation Eases, All Eyes on Fed's Upcoming Rate Decision

• U.S. stocks rallied for five consecutive days, recovering from last week's steep losses.

  • The S&P 500 gained over 4% this week, after falling 4.2% the previous week.

  • For the third quarter, the S&P 500 is up about 3%.

• Inflation data came in line with expectations, showing continued moderation.

  • Headline CPI inflation eased to 2.5% year-over-year.

  • Both CPI and PPI figures for August met expectations.

• Bond yields continued to decline, reflecting cooling economic growth and rate cut expectations.

  • The 10-year Treasury yield fell to around 3.66%, near yearly lows.

  • This is significantly below April's high of 4.7%.

• All attention turns to next week's Federal Reserve meeting.

  • The Fed is expected to cut rates, likely by 0.25%, although some investors predict a more aggressive 0.50% cut.

  • Markets anticipate the Fed signaling a significant easing in monetary policy.

• Q2 earnings recap:

  • Overall S&P 500 earnings grew by an average of 11.3%.

  • Utilities sector led with 21% year-over-year growth.

INCOME BUILDING

Is It Still a Good Time to Buy T-Bills and Bonds with Fed Rate Cuts Looming?

The Federal Reserve has signaled its intention to cut interest rates, and we're hearing a lot of chatter among investors about whether Treasury bills (T-bills) and bonds are still smart investments.

T-bill ladders have been quite popular lately, with many investors being drawn to the high short-term yields, often topping 5%, and the bonus of being exempt from state and local taxes. But with rate cuts on the horizon, we're hearing concerns about how long these attractive yields will last.

Some folks we've talked to are thinking about sticking with money market funds. They're betting that rates will come down slowly, giving them more flexibility with their cash.

We're also hearing arguments for locking in current rates on longer-term bonds. Some investors point to historical data suggesting that when 10-year Treasury yields are above 3%, and the yield curve isn't inverted, the returns can be quite competitive with stock portfolios over the long haul. This seems to be resonating particularly with those nearing retirement or already there.

The classic 60/40 stock-bond portfolio mix is a hot topic of conversation, too. We're seeing renewed interest as bonds regain their reputation for balancing out stock market jitters. But opinions will, of course, vary based on your particular financial situation. Some investors we've heard from swear by all-stock portfolios for the long term, while others defend the 60/40 approach for its blend of growth potential and stability.

Interestingly, we're noticing a trend of investors bypassing bond funds altogether and going straight for individual bonds. The idea is to hold them to maturity and sidestep interest rate risks. Some craft their bond ladders, telling us they feel more in control this way.

Your decision to buy T-bills and bonds should factor in your retirement timeline, risk tolerance, and income needs. Investors nearing retirement (within 5-10 years) might lean towards locking in current yields, while those with 20+ years until retirement might favor stocks for growth potential.

With the Fed set to lower rates, the fixed-income market offers both opportunities and risks. Your choice depends on your unique financial situation, such as whether you wish to secure current yields versus maintaining flexibility with shorter-term investments.

What's Your Take?

We're curious about your approach to T-bills and bonds right now. Are you buying, holding, or looking at alternatives? What's driving your strategy in this changing rate environment?

Share your thoughts – we'd love to hear different perspectives and discuss the current fixed-income landscape with you!

INCOME BUILDING

Cash Rates

Government Money Market Funds (7-Day Yields)

• SNVXX (Schwab Government Money Fund - Investor Shares): 4.99%

• SPAXX (Fidelity Government Money Market Fund): 4.96%

• TTTXX (BlackRock Liquidity Funds: Treasury Trust - Institutional Class): 5.09%

• VMFXX (Federal Money Market Fund): 5.21%

Brokered CD Rates (6-Month Rate)

• Charles Schwab: 4.76%

• E*Trade: —

• Fidelity: 4.65%

• Merrill Edge and Merrill Lynch: —

• Vanguard: 4.65%

ETFs

• SGOV (iShares 0-3 Month Treasury Bond ETF): 5.19%

• BIL (SPDR Bloomberg 1-3 Month T-Bill ETF): 5.11%

• USFR (WisdomTree Floating Rate Treasury Fund): 5.19%

• TFLO (iShares Treasury Floating Rate Bond ETF): 5.21%

BONUSES

Brokerage, Bank and Credit Card Bonuses

Brokerage Bonuses

• E*Trade (still active): Up to $4,000 in bonuses for deposits made within 60 days of enrollment. The lower deposit bonuses are also excellent, with E*Trade offering a bonus of $100 for a deposit of just $50. Offer here.

  • Use promo code PROMO24.

    • $50+ will receive $100

    • $1,000-$24,999 will receive $150

    • $25,000-$49,999 will receive $150

• tastytrade (still active): Offering up to $5,000 in bonuses. Lower deposit bonuses are attractive, with a $100 bonus for a deposit of $5,000 (2% return). Offer here.

• Robinhood (still active): Offering a 1% bonus for transferring any table brokerage holdings. No maximum, but deposits must be held for two years after account opening. Offer here.

Bank Bonuses

• BMO Harris (active) — Earn up to a $560 bonus when you open a new Smart Advantage or BMO Harris Premier checking account. Offer here.

  • Availability: Nationwide

  • Soft credit inquiry

• U.S. Bank (active) — Earn up to a $450 bonus when you open a new Smartly checking account when you use promo code 2024JUL. Offer here.

  • Availability: Nationwide

  • Soft credit inquiry.

• Axos Bank (active) — $500 when you open a new rewards checking account with promo code RC500 and certain requirements. Offer here.

  • Availability: Nationwide

  • Soft credit inquiry.

Credit Card Bonuses

• American Express Marriott Bonvoy Brilliant Card — Get 185,000 Marriott Bonvoy points after $6,000 in spend within the first six months of account opening. Offer here through October 2, 2024.

  American Express Marriott Bonvoy Bevy Card — Get 155,000 Marriott Bonvoy points after $5,000 in spend within the first six months of account opening. Offer here through October 2, 2024.

• Barclays jetBlue Plus Card (active) — Get 80,000 JetBlue points after $1,000 in spend within the first 90 days of account opening. Offer here.

• Chase Ink Preferred (active) — Get 120,000 Ultimate Rewards bonus points when you spend $8,000 in the first three months after account opening. Offer here.

• Capital One Venture (active) — Enjoy $250 on Capital One Travel in your first year and earn 75,000 bonus miles after spending $4,000 in the first 3 months. Offer here.

• American Express Hilton Surpass Card (active) — 150,000 points Hilton Honors points after spending $2,000 in 3 months. Get an additional 50,000 points after spending a total of $10,000 within the first 6 months. Offer here.

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