Medium and long-term interest rates in the U.S. have fallen precipitously in the past month. Indeed, the yield on the 10 Year U.S. Treasury Bond has fallen from over 2.55% in early May to just above 2.07% today. A confluence of factors are at least partially responsible for falling interest rates: increasing trade tensions with China, renewed stock market volatility and global economic growth trends all feature prominently. While economists and investors alike have worried about rapidly rising interest rates over the past several years, last month’s decline in yields marks a new chapter for this economic cycle: the prospect of lower, and not higher, long-term interest rates in the near future. Since the end of the Global Financial Crisis, Wall Street economists have expected interest rates to recover from literal records lows. And they have. In the summer of 2016, the yield on 10 Year U.S. Treasury bonds sunk below 1.4%. Yields on the 10 Year rose to well above 3% in late 2018. 10 Year US Treasury Bond Yield Over Time Source: https://www.macrotrends.net/2016/10-year-treasury-bond-rate-yield-chart The implications of lower long-term interest rates are both good and bad. While lower rates are often stimulative and can improve corporate health and profitability, higher interest rates reward savers and bond investors. Rates shifting lower can also signal an upcoming economic recession. While it’s too early to know if a recession is ahead, we do monitor this signal as one of the more reliable indicators of future economic growth (or lack thereof). Now that we have experienced a decline in longer term yields, borrowing has become more affordable—a significant silver lining for US consumers. If you haven’t refinanced your mortgage over the past five years, this is now another opportunity to do so. 30-year fixed mortgages have recently fallen below 4% again. Though rates can always go lower, locking in a sub 4% fixed mortgage rate seems prudent. We continue to monitor closely the latest developments in the global financial markets. Though we can’t predict the next year’s investment results, we can begin preparing our clients for the possibility of an economic slowdown. Our latest proprietary tool, the Recession Prep Scorecard™, is at the very heart of this preparation. Please reach out to us directly to discuss your custom plan in greater detail, particularly in light of lower long-term interest rates. Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.