March 19, 2021
Despite setting another record high mid-week, the S&P 500 ended the week lower as bond markets continued to sound the alarm over rising rates. Stocks hit all-time highs Wednesday as Federal Reserve Chairman Jerome Powell struck the right tone at this week’s FOMC meeting. He once again reiterated the central bank’s commitment to keeping interest rates low for an extended period of time in order to maintain the economy’s momentum. The FOMC meeting came during a light week of economic data. Retail sales and industrial production both took a hit in February due to icy weather that left businesses without power and disrupted supply chains nationwide. Still, the setbacks look to be only temporary as businesses have been quick to resume operations. The spring thaw should also release newly vaccinated consumers, whose pockets will be stuffed with stimulus dollars. After a slow initial Covid vaccine roll out, the U.S. hit its 100 million “shots in arms” goal on Friday, which equates to 12.30% of the population being fully vaccinated against Covid-19. With the rate of vaccinations accelerating, consumers should be more mobile and eager to spend their recently issued $1400 stimulus checks. However, things have turned too positive for markets recently, who are growing more wary of the potential inflationary forces gathering. The U.S. Treasury yield hit a one-year high of 1.75% this week, up 0.30% from the beginning of the month. This took its toll on growth stocks, pushing the S&P 500 index down -0.77% for the week.
Bond Bears Keep Up the Pressure on the Fed
Winter Weather Freezes Spending
Industrial Production Slips, Breaking Four Month Win Streak
The Shape of Social Security
- Low income workers tend to claim Social Security benefits early at age 62. Given that lower income individuals have shorter life expectancies, claiming early may be a reasonable idea but the research shows they tend to claim too early.
- Higher income earners also claim early. Of all workers in the highest quintile of earnings, 37% take Social Security at age 62.
- Early claiming of benefits is a boon to the Social Security program. Workers at all income levels left about $1.9 billion in the program’s coffers in 2018 by claiming benefits early.
Source: Andrew G. Biggs, Anqi Chen, and Alicia H. Munnell, ‘The Consequences of Current Benefit Adjustments for Early and Delayed Claiming’, Center for Retirement Research at Boston College, January 2021, https://crr.bc.edu/wp-content/uploads/2021/01/wp_2021-3_.pdf (accessed March 19, 2021)