Hello, YieldAlley readers! In this issue:
Why Active Bond Funds Keep Beating Index Funds
Middle East Conflict Fuels Inflation Fears as Tech Stocks Extend Five-Week Slide
Save $40 on Your Next Grocery Order at Safeway, Albertsons, and Affiliated Stores
US vinyl sales topped $1 billion last year for the first time since 1983
And more!
NEWS
Standout Stories
📉 How to Handle Market Volatility at Every Life Stage (Morningstar)
🐣 The Hack That Turns Trump Accounts Into Multimillion-Dollar Tax-Free Nest Eggs (WSJ)
🤔 How to Own The Best Stocks (A Wealth of Common Sense)
💾 Tesla’s Secret Weapon Is a Giant Metal Box (The Atlantic)
🤑 They’re Rich but Not Famous—and They’re Suddenly Everywhere (WSJ)
MARKET THOUGHTS
Middle East Conflict Fuels Inflation Fears as Tech Stocks Extend Five-Week Slide
ECONOMY
U.S. business activity growth slowed in March, with the Flash Composite PMI falling to an 11-month low of 51.4, down from 51.9 in February, dragged lower by weaker services activity even as manufacturing output strengthened modestly. Inflationary pressures intensified, with input costs rising at the fastest pace in 10 months and firms passing through higher prices at the quickest rate since 2022, widely attributed to elevated energy costs and supply disruptions linked to the Middle East conflict. Employment declined slightly, marking the first drop in over a year as firms sought to cut overhead amid uncertainty. Initial jobless claims came in at 210,000 for the week ended March 21, roughly in line with expectations, while continuing claims fell by 32,000 to 1.819 million, the lowest level since May 2024. The University of Michigan's March Consumer Sentiment Index declined to 53.3 from 56.6, with consumers' short-term economic outlook dropping 14% and personal finance expectations falling 10%. Year-ahead inflation expectations climbed to 3.8%, up 0.4 percentage points from February, the largest month-over-month increase since April 2025.
STOCKS
Major U.S. indexes finished a volatile, headline-driven week mixed, with the S&P 500 closing at 6,368.85 (down 2.1%), the Nasdaq Composite at 20,948.36 (down 3.2%), and the Dow Jones Industrial Average at 45,166.64 (down 0.9%), all posting losses for a fifth consecutive week. In contrast, the S&P MidCap 400 rose to 3,310.78 and the Russell 2000 edged up to 2,449.69, with both indexes snapping four-week losing streaks. Equities rallied early in the week on optimism that the Middle East conflict could de-escalate, but sentiment deteriorated as conflicting headlines undermined confidence in a near-term resolution. Large-cap value stocks outperformed their growth counterparts for the third straight week, while continued pressure on large-cap technology names weighed on the broader market. Year-to-date, the Nasdaq is down 9.87%, the S&P 500 has fallen 6.96%, the Dow is off 6.03%, and the Russell 2000 has declined 1.30%, while the S&P MidCap 400 is barely positive at 0.17%.
FIXED INCOME
U.S. Treasuries finished the week close to unchanged despite bouts of midweek yield volatility, as markets appeared to price in the possibility of a Federal Reserve rate hike given that the Middle East conflict and the subsequent rise in oil prices have heightened inflation risks. High yield bonds were also little changed on the week, advancing early on encouraging geopolitical headlines before pulling back as broader optimism faded. Investor focus on potential corporate mergers and acquisitions contributed to elevated trading activity in the credit market.
INCOME BUILDING TIP
Why Active Bond Funds Keep Beating Index Funds (and What It Means for Your Portfolio)
If you've embraced index investing for stocks, you might assume the same approach works best for bonds. But the data tells a different story. Active bond managers have consistently outperformed their passive benchmarks over longer time periods, and the reasons are baked into how the bond market itself works.
Unlike the stock market, the bond market is fragmented, complex, and full of pricing gaps. Many bonds trade infrequently, and a surprising amount of activity still happens over phone calls and emails rather than electronic exchanges. The sheer variety of issuers, maturities, credit qualities, and structures means that large portions of the market are simply not priced efficiently. This is especially true as you move beyond Treasuries into corporate debt and securitized products like asset-backed securities, where differentiation creates the most room for skilled managers to find mispriced opportunities.
Active managers also operate with far more flexibility than an index fund can. They can use leverage to increase total market exposure beyond 100%, incorporate derivatives, and allocate heavily to asset-backed securities, a high-quality, floating-rate corner of the market that barely shows up in the Bloomberg US Aggregate Bond Index. The typical active core bond fund holds around 15% in ABS, capturing attractive yields with minimal duration risk. Active funds also tend to overweight BBB-rated corporate bonds (15-20% of holdings vs. roughly 10% in the index), where historical default rates remain very low but the yield premium over higher-rated debt is meaningful. An index fund tracking the Aggregate simply doesn't have the mandate to make these kinds of allocation decisions.
The takeaway isn't that every active bond fund is worth owning. Cost still matters enormously, so look for low expense ratios. Don't chase the highest-yielding fund, as yield almost always comes packaged with proportional risk. Instead, look for a reasonably sized manager with deep fixed income experience and a track record of disciplined risk-taking. For the equity side of your portfolio, indexing remains hard to beat. But for bonds, giving an active manager a seat at the table is worth serious consideration.
INCOME BUILDING
Cash Rates
Government Money Market Funds (7-Day Yields)
SNVXX (Schwab Government Money Fund - Investor Shares): 3.37%
SPAXX (Fidelity Government Money Market Fund): 3.29%
TTTXX (BlackRock Liquidity Funds: Treasury Trust - Institutional Class): 3.54%
VMFXX (Federal Money Market Fund): 3.58%
Brokered CD Rates (6-Month Rate)
Charles Schwab: 3.89%
E*Trade: —
Fidelity: 3.90%
Merrill Edge and Merrill Lynch: —
Vanguard: 3.95%
ETFs (30-Day Yields)
SGOV (iShares 0-3 Month Treasury Bond ETF): 3.54%
BIL (SPDR Bloomberg 1-3 Month T-Bill ETF): 3.48%
USFR (WisdomTree Floating Rate Treasury Fund): 3.59%
TFLO (iShares Treasury Floating Rate Bond ETF): 3.58%
DEALS AND BONUSES
Save $40 on Your Next Grocery Order at Safeway, Albertsons, and Affiliated Stores
A targeted offer is rolling out across Safeway, Albertsons, Vons, and their affiliated grocery chains giving $40 off online orders of $75 or more. That's effectively a 53% discount on a baseline grocery run. It's YMMV (your mileage may vary), so check your loyalty account to see if you're targeted.
Offer Details
Check your Just4U loyalty account: Albertsons | Safeway | Vons | Jewel-Osco | Shaw's | Star Market | Randalls | Tom Thumb | Pavilions | Haggen | Carrs | Balducci's
Main promotion: $40 off online grocery orders of $75+
Promo code: None (clip offer in your Just4U loyalty account before checkout)
Valid dates: Through April 7, 2026
Eligibility: Targeted, may not appear in all accounts. Limit 1 per household.
Key restrictions: $75 minimum calculated on qualifying items only (excludes alcohol, tobacco, fluid dairy). Not valid on Instacart-fulfilled orders. Cannot be combined with other free/reduced delivery or service fee offers.
Our Thoughts
This is one of the better grocery promotions we've seen recently. At $40 off $75, you're getting more than half off a standard grocery order, which is hard to beat. Plan your order to hit the $75 threshold on qualifying items and stock up on pantry staples or household essentials to maximize the value. If multiple family members shop at these stores, have each person check their own loyalty account since the offer is personalized.
Picture of the Week
