The Fed and Rate Cuts

Something New!!!!!

Beginning this week, we will provide you with a helpful financial planning topic that we believe may be of interest to you. Comprehensive, detail planning is an important part of what we do and available to every client at DWM. We will continue to emphasize how important planning is for your overall financial health. It’s a priority for us.

D360 Weekly Financial Strategies

By: Christina Ko Talbot, CFP®
Senior Vice President, Executive Partner

Q: Why set up quarterly estimated tax payments?

A: If the amount of income tax withheld from your salary or pension is not enough, or if you receive income such as interest, dividends, alimony, self-employment income, capital gains, prizes and awards, you may have to make estimated tax payments.

If you don’t pay enough tax through withholding and estimated tax payments, you may have to pay a penalty. You may also have to pay a penalty if your estimated tax payments are late, even if you are due a refund when you file your tax return.

Individuals, including sole proprietors, partners, and S corporation shareholders, generally use Form 1040-ES, to figure estimated tax. Feel free to discuss with us to help figure out if estimated tax payments make sense for your tax plan.

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D360 Weekly Investment Update: Fed and Rate Cuts

The Federal Reserve chose not to raise interest rates, but instead left rates at current levels. So why is the market responding so positively if rate cuts have not been announced?
 
The Federal Reserve attempts to impact the economy through their language. Markets watch carefully for certain adjectives or indications of what the future might hold.

We believe the market is rallying because of the Federal Reserve’s implication that they still plan on cutting rates three times this year. This is consistent with our view that the 10-year treasury likely will move towards 3.75% sometime during the course of 2024.
 
The Federal Reserve is telegraphing that they believe the economy is slowing down, but not to the point where action is necessary today. Words are a powerful tool and once again, it seems to be working in terms of market psychology.
 
Our investment philosophy is designed to be integrated with our economic and market outlook. We believe the economy is slowing down, and that rate cuts are likely this year to avoid a recession. Our fixed and equity allocations reflect this viewpoint, and we will continue to adjust as needed.
 
A recent CNN article highlighted the Fed’s latest action. You can see excerpts here.  

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Begin quote 

• "Markets surged Wednesday and closed at all-time highs after the Federal Reserve said it is holding its benchmark lending rate at 5.25% and suggested it still expects to cut rates three times this year.
• It's the fifth straight policy meeting where the central bank has opted not to raise or cut its interest rate.
• While the central bank's 11 recent rate hikes have succeeded in bringing down inflation that has crushed many Americans, Fed officials believe their work is not done and that rates should not be trimmed just yet.
• Investors weren't expecting any surprises Wednesday, and markets had long priced in no rate moves for the March meeting.
• Fed officials also released a fresh set of economic projections, giving Wall Street — and the White House — some clues on the timing and pace of rate cuts this year."

End quote 

Source: https://amp.cnn.com/cnn/business/live-news/markets-fed-meeting-03-20-24/index.html 

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Disclosures:

The 10-year Treasury yield is the annualized rate of return an investor would earn on a 10-year Treasury note issued by the U.S. government if an investor held the note to maturity.

Always consult an attorney or CPA regarding legal or tax questions.