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No New Interest Rate Hikes for 2019 Help Treasuries Rise

 

May 24, 2019 (Investorideas.com Newswire) The Federal Reserve confirmed in late March that they were not considering any interest rate hikes in 2019. As a result, Treasuries have risen from their lowest rates over the past 15 months. Although the United States gross domestic product (GDP) displayed lower growth than anticipated in the fourth quarter of 2018, resulting in an annual growth rate lower than the three percent the Trump administration set as its goal. In addition, profits experienced by American corporations did not increase, marking the first time they have not done so over the past two years.

The president of the New York Fed, John Williams, does not believe these factors are a sign that a recession may soon hit the United States economy. Equities have remained steady and strong and the stock market has only experienced its usual ups and downs of gains and losses with no large swings in either direction. With enhanced foreign trade and financial relationships, some volatility is expected. Still, treasury sales of five- and seven-year notes have brought in billions of dollars as of March rolls to a close.

Traders have experienced harder-than-experienced challenges in the futures market because of the volatility experienced throughout 2018, largely as a result of broader gains and losses in overseas markets. While this could lead to trouble for the United States stock market in 2019, the current rise in treasuries and during a time when equities remain steady could mitigate or prevent any huge losses.

Traders may be impacted, however, by the New York Stock Exchange delisting several corporations in the anticipation that those organizations may soon file for bankruptcy protection. In late March, such an action was taken against Cloud Peak Energy, a major coal corporation. Although the company has not filed for protection yet, Sadek and Cooper Law Offices explain that "bankruptcy can be an immensely powerful financial tool." Home to a leading Philadelphia bankruptcy lawyer, this firm confirms that "Chapter 11 bankruptcy may even be able to save a business that is on the verge of collapse."

That's good news for traders who invest in seemingly volatile equities. If traders plan ahead to hold equities long-term, with the financial resources to endure short-term losses, great gains can be experienced as invested-in organizations reorganize through the bankruptcy process and reemerge stronger and begin to again experience gains in the market. Indeed, holding on to asset-based equities after the discharge or payment of debts can lead to huge gains for equity traders. Traders may also consider treasury trading as a smart investment while sitting tight on equity investments expected to yield greater earnings in the future.


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