Presented by Mark Gallagher

General Market News
• Last week’s inflation reports showed encouraging signs of softening, but the Federal Reserve (Fed) is still far from out of the woods and is looking for much stronger signs of moderation. For July, the Producer Price Index (PPI) fell 0.5 percent (against market estimates of a 0.2 percent increase) and the Consumer Price Index (CPI) showed a price increase of 8.5 percent on a headline basis (against market estimates of an 8.7 percent increase). Despite these mildly positive signs, there is still plenty of work to be done and many market participants expect the Fed to consider a 50 or 75 basis point (bp) rate hike at the September FOMC meeting. The U.S. Treasury yield curve saw modest changes last week. The 2-year and 30-year fell 1 bp (to 3.2 percent) and 3 bps (to 3.13 percent), respectively, while the 5-year and 10-year rose 6 bps (to 2.97 percent) and 8 bps (to 2.86 percent), respectively.
• Equity markets rallied last week as both consumer and producer inflation came in lower than expected, offering the first sign of relief from rising prices since the second quarter of 2021. While inflation remains well above long-term norms, this represents the first hint of potential easing moving forward. It’s important to note that a main contributor to the inflation report was a monthly decline in fuel prices, which are more volatile than items such as housing and impact the inflation data on a lag. Despite the softer data on inflation, performance was mixed. Sectors sensitive to inflation, such as energy, financials, materials, and REITs, were among the best performers. Consumer staples and health care were among the worst performers. This week will see numerous reports from retailers such as Walmart (WMT), Home Depot (HD), Lowes (LOW) TJX Companies (TJX), Target (TGT), Estee Lauder (EL), and Ross Stores (ROST).
• On Wednesday, the July Consumer Price Index report was released. Consumer inflation came in below expectations, with headline prices remaining unchanged in July against calls for a 0.2 percent increase. On a year-over-year basis, consumer prices were up 8.5 percent, below the 9.1 percent increase in June and economist estimates for an 8.7 percent rise. Much of the slowdown in headline prices was due to falling gas prices; however, even core inflation showed signs of moderating. Core consumer prices, which strip out energy and food prices, increased 0.3 percent, well below the 0.7 percent increase in June and economist estimates for a 0.5 percent rise.
• Thursday saw the release of the July Producer Price Index report. Producer prices also showed signs of slowing inflation. Headline producer prices fell 0.5 percent against calls for a 0.2 percent increase, marking the first monthly decline for producer prices in more than two years. Producer inflation cooled on a year-over-year basis, too. Core producer prices, which strip out volatile energy and food prices, increased 0.2 percent during the month and 7.6 percent year-over-year, failing to meet economist estimates. All in all, the two inflation reports showed positive signs of cooling inflationary pressure, but it’s likely the Fed will want to see continued evidence of slowing inflation.

Source: Bloomberg, as of August 12, 2022

Source: Morningstar Direct, as of August 12, 2022

What to Look Forward To
On Wednesday, the FOMC meeting minutes from the Fed’s July meeting will be released. The Fed hiked the federal funds rate by 75 bps at that meeting, and economists and investors will monitor the minutes for hints about future Fed plans. Although strong job growth and cooling inflationary pressure in July were encouraging, the central bank is still expected to tighten monetary policy throughout the rest of the year. Markets are pricing in a rate hike of 50 bps at the Fed’s next meeting on September 21, with additional hikes expected in November and December.

Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. One basis point is equal to 1/100th of 1 percent, or 0.01 percent.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com

Authored by the Investment Research team at Commonwealth Financial Network.

© 2022 Commonwealth Financial Network®

Presented by Mark Gallagher

General Market News
• The Federal Reserve (Fed) raised interest rates by another 75 basis points (bps) at last week’s FOMC meeting, bringing its target range to 2.25 percent to 2.50 percent. Inflation remains stubbornly high and conversation among market participants is becoming increasingly focused on the timing—rather than the likelihood—of a potential recession. Some believe the U.S. may already be in a recession after seeing two quarters of economic contraction as measured by gross domestic product (GDP). Others, including Fed Bank of Atlanta President Raphael Bostic, maintain hope that such a development can still be avoided if the job market remains robust. “I don’t think the country is in a recession,” Mr. Bostic said on NPR. “One of the things that I’ve been encouraged by is actually how strong the job growth has been, which suggests to me there’s a lot of momentum in the economy.” He added, “There’s a lot of demand out there, and so I think we’re a ways away from a recession.” The U.S. Treasury yield curve saw some inversion last week. Treasury yields fell on the short to intermediate end of the curve with the 2-year, 5-year, and 10-year down 6 bps (to 3 percent), 11 bps (to 2.73 percent), and 4 bps (to 2.71 percent), respectively. The 30-year, however, was up 8 bps (to 3.06 percent).
• Equity markets rallied last week, supported by seemingly dovish Fed speak from FOMC Chairman Jerome Powell and better-than-expected second-quarter earnings reports from Apple (AAPL) and Amazon (AMZN). In recent months, we’ve heard from companies such as Micron (MU), Qualcomm (QCOM), and Apple about the impact of lockdowns in China on sales and parts availability. In April, Apple said it expected a $4 billion–$8 billion revenue hit during the second quarter. The hit was smaller than expected, with the company beating revenue and gaining 3 percent in iPhone revenue growth year-over-year. Amazon’s earnings were bolstered by better-than-expected performance from its cloud and advertising segments. Cost cuts on the fulfillment side also showed the company’s ability to adapt following massive e-commerce demand during the Covid-19 pandemic. While these two FAANG names helped ease broader growth, the biggest news last week was the 75 bps rate hike at the July meeting. Powell highlighted the need for the Fed to remain data dependent during the post-meeting press conference, which was seen as an easing from prior discussion about crushing inflation. This commentary led market participants to believe we may be close to the end of a Fed rate hike cycle, with the bond market pricing in cuts to the federal funds rate in March of 2023.
• On Wednesday, the FOMC rate decision from the Fed’s July meeting was released. The Fed hiked the upper limit for the federal funds rate by 75 bps, raising the target from 1.75 percent to 2.5 percent. This action, the central bank’s second consecutive 75 bps hike, designed to slow the pace of the economy and combat inflation, was widely expected by markets and economists. Looking ahead, the Fed is expected to continue to tighten monetary policy throughout the year; however, the pace of future rate hikes will be highly dependent on July and August inflation and jobs reports.
• On Thursday, the advance estimate for annualized second-quarter GDP growth was released. The report showed that the economy contracted at an annualized rate of 0.9 percent, which was worse than the consensus 0.4 percent increase that was expected. This marks two consecutive quarters with economic contraction, though this slowdown in growth is not expected to slow the Fed’s tightening plans, given still-high levels of inflation throughout the economy. Personal consumption continued to show modest growth during the quarter, with consumption up 1 percent on an annualized basis against forecasts for a 1.2 percent increase.

Source: Bloomberg, as of July 29, 2022

Source: Morningstar Direct, as of July 29, 2022

What to Look Forward To
On Friday, the July employment report is set to be released. Economists expect to see that 250,000 jobs were added, far fewer than the 372,000 that were added in June but still strong on a historical basis. The unemployment rate is expected to remain unchanged at 3.6 percent for the fifth consecutive month, which would tie the post-pandemic low. If estimates hold, this report would signal continued solid growth for the labor market, which, in turn, could help support the Fed’s efforts to tighten monetary policy to rein in inflation in the months ahead.

Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. One basis point is equal to 1/100th of 1 percent, or 0.01 percent.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com

Authored by the Investment Research team at Commonwealth Financial Network.

© 2022 Commonwealth Financial Network®

Presented by Mark Gallagher

General Market News
• U.S. Treasury yields were down last week as expectations of a recession and a potential slowdown in rate increases from the Federal Reserve (Fed) were reflected in fixed income markets. Economic data releases suggested a slowing of the global economy. The housing sector showed signs of softening with the North American Homebuilders Index, housing starts, and existing home sales all coming in lower than expected. Initial jobless claims picked up; both Europe and the U.S. Purchasing Managers Index fell below 50, indicating expectations of economic contraction. The 2-year, 5-year, 10-year, and 30-year fell 15 basis points (bps) (to 2.99 percent), 18 bps (to 2.87 percent), 15 bps (to 2.78 percent), and 10 bps (to 3 percent), respectively.
• Global equity markets rallied last week, with bond yields coming down as central banks continue to examine policies to combat inflation. The softening data in the U.S. and Europe indicate inflation may be peaking and that central bank policy could be closer to the end of the tightening cycle. There were also sighs of relief in both U.S. and European markets. In the U.S., better-than-expected Tesla (TSLA) and Netflix (NFLX) earnings gave way for the potential for earnings to be more robust than initially expected. Thus far, the blended earnings growth rate for the S&P 500 sits at 4.8 percent versus 4.0 percent expected. In Europe, the Nord Stream pipeline was restarted on Thursday amid fears that Russia would shut gas off completely. That said, fears aren’t completely gone with another turbine slated for maintenance on July 26. This week will bring a slew of large tech earnings, the second-quarter gross domestic product (GDP) estimate, and the July Federal Open Market Committee (FOMC) rate decision.
• On Tuesday, the June housing starts and building permits reports were released. Housing starts fell 2 percent against calls for a 2 percent increase, while permits dropped 0.6 percent against calls for a 2.7 percent decline. Although these reports can be volatile on a monthly basis, this marks two months in a row with declining starts and three consecutive months with falling permits. Despite the recent decline in new home construction, starts and permits remain well above pre-pandemic levels, supported by low levels of supply of existing homes for sale and rising housing prices. Looking ahead, most economists expect to see a further slowdown in the housing sector due to rising mortgage rates.
• Wednesday saw the release of the June existing home sales report. Sales of existing homes fell 5.4 percent against calls for a more modest 1.1 percent decline. This marks five consecutive months with declining existing home sales. Low supply, rising prices, and rising mortgage rates have served as headwinds for faster home sales this year. The recent slowdown in sales growth brought the pace of existing home sales to its slowest level since national shutdown measures expired in spring 2020, highlighting the current challenges for the housing market.

Source: Bloomberg, as of July 22, 2022

Source: Morningstar Direct, as of July 22, 2022

What to Look Forward To

Wednesday will see the release of the FOMC rate decision from the Fed’s July meeting. The central bank is expected to hike the upper limit of the federal funds rate by 75 bps, which would boost the upper limit from 1.75 percent to 2.5 percent. The Fed, which started hiking rates in March, is expected to continue to increase rates throughout the rest of the year to try to combat high levels of inflationary pressure across the economy. Economists will also closely monitor the Fed’s news release and postmeeting news conference for hints on the future path of monetary policy.

On Thursday, the advance estimate for annualized second-quarter GDP growth is set to be released. Economists expect to see that the economy grew at an annualized rate of 0.4 percent. If estimates hold, this would be a relatively encouraging rebound in economic activity after a 1.6 percent annualized GDP decline in the first quarter. Personal consumption growth is expected to increase 1.2 percent on an annualized basis, down from a 1.8 percent increase in the first quarter but still in healthy expansionary territory.

Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000^® Index measures the performance of the 2,000 smallest companies in the Russell 3000^® Index. The Bloomberg US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. One basis point is equal to 1/100th of 1 percent, or 0.01 percent.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com.

Authored by the Investment Research team at Commonwealth Financial Network.

© 2022 Commonwealth Financial Network®

Presented by Mark Gallagher

General Market News
• Last Wednesday, U.S. inflation numbers for the month of June were released and the Consumer Price Index (CPI) report exceeded expectations with an increase of 9.1 percent year-over-year. This upside surprise in prices is keeping the Federal Reserve (Fed) on its toes in advance of its July 26–27 meeting; some market participants are expecting the Federal Open Market Committee (FOMC) to increase rates by a full percentage point, while other Fed officials are trying to reign in those expectations. Fed Governor Christopher Waller currently believes a 75 basis point (bp) hike is the right move. “You don’t want to overdo the rate hikes. A 75 [bps] hike, folks, is huge,” Waller explained. “Don’t think because you’re not going 100, you’re not doing your job.” Waller didn’t rule out a 100 bps increase if last month’s remaining economic data announcements point him down that path, but that is yet to be seen. This week will bring numerous data releases related to housing, a significant component of inflation, so there is still much that could develop prior to next week’s Fed meeting. U.S. Treasury yields were down modestly last week; the 2-year, 5-year, 10-year, and 30-year fell 1 bp (to 3.10 percent), 9 bps (to 3.04 percent), 15 bps (to 2.93 percent), and 16 bps (to 3.09 percent), respectively.
• Markets sold off slightly last week as a higher-than-expected inflation report led to uncertainty around Fed policy. Wednesday’s CPI data came in with a 1.3 percent month-over-month increase against expectations for 1.1 percent. Energy, autos, airfares, and shelter drove the index higher. Following the report, expectations for a more rapid 100 bps federal funds rate hike increased dramatically. These expectations climbed near 90 percent at one point before St. Louis Fed President James Bullard—who is known as the most hawkish FOMC member—stated that he does not feel strongly for one at the upcoming meeting. As a result, stocks and growth (particularly technology, health care, and consumer discretionary) rallied on Friday. This performance was mixed with consumer staples, utilities, and tech as the three top-performing sectors for the week. Communication services, energy, and materials lagged as the President’s trip to Saudi Arabia led to speculation around higher production from OPEC countries.
• On Wednesday, the June Consumer Price Index report was released. Consumer prices increased more than expected, with headline prices rising 1.3 percent against calls for a 1.1 percent increase. On a year-over-year basis, headline consumer prices increased 9.1 percent, up from 8.6 percent in May and above economist estimates for an 8.8 percent increase. That’s the highest level of year-over-year consumer inflation in 41 years. Core consumer prices, which strip out the impact of volatile food and energy prices, increased 0.7 percent during the month and 5.9 percent year-over-year against forecasts for 0.5 percent and 5.7 percent increases, respectively. Despite the larger-than-expected increase in core consumer prices, this represents a modest slowdown in year-over-year core consumer inflation after a 6 percent increase in May.
• On Thursday, the June Producer Price Index report showed that producer prices increased more than expected, rising 1.1 percent in the month and 11.3 percent year-over-year against calls for 0.8 percent and 10.7 percent gains, respectively. Core producer prices, which strip out volatile food and energy prices, increased 0.4 percent in June and 8.2 percent year-over-year. Producer inflation has been driven by supply chain issues and rising material and labor costs this year, and the report showed that these headwinds continued to affect prices in June. Given still-high levels of consumer and producer inflation in June, the Fed is expected to spend the year tightening monetary policy to try to slow economic expansion and combat rising price pressure.
• On Friday, the June retail sales report was released. Retail sales increased more than expected, with headline sales increasing 1 percent against forecasts for a 0.9 percent increase. This was an encouraging rebound for retail sales growth after a 0.3 percent drop in sales in May, indicating that the slowdown was temporary rather than the start of a sustained slowdown. Core retail sales, which exclude auto and gas sales, increased 0.7 percent, up from the 0.1 percent drop in May and well above economist estimates for a 0.1 percent increase. Consumer spending held up well during the first half of the year despite headwinds created by inflation, stock market sell-offs, and worsening consumer sentiment, which is an encouraging sign that consumers remain willing and able to go out and spend.

Source: Bloomberg, as of July 15, 2022

Source: Morningstar Direct, as of July 15, 2022

What to Look Forward To
On Tuesday, the June housing starts and building permits reports are set to be released. These measures of new home construction are expected to be mixed, with permits expected to decline 0.9 percent and starts anticipated to increase 3 percent. These reports, which can be volatile on a month-to-month basis, are expected to come in well above pre-pandemic levels. Housing has been one of the best performing sectors since initial lockdowns ended in 2020, but the industry has begun showing signs of a slowdown this year, driven in large part by rising mortgage rates and a limited supply of homes for sale. If we see an increase in new home construction during the month, it would be an encouraging sign that home builders continued to break ground on new units, which, in turn, would help the supply-constrained market.

Wednesday will see the release of the June existing home sales report. Sales of existing homes are set to decline 0.2 percent after a 3.4 percent decline in May. On an annualized basis, sales of existing homes are set to fall to 5.4 million, down notably from the recent high of 6.5 million sales in January. Rising mortgage rates, a lack of supply of homes for sale, and rising prices have contributed to the slowdown in existing home sales growth. If estimates hold, it would mark the lowest level of existing home sales since the expiration of initial lockdowns, leaving sales near their pre-pandemic level. Given the fact that housing costs represent a large portion of consumer spending, the slowdown in sales growth may help slow home price appreciation and consumer inflation in the second half of the year.

Disclosures: Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. All indices are unmanaged and are not available for direct investment by the public. Past performance is not indicative of future results. The S&P 500 is based on the average performance of the 500 industrial stocks monitored by Standard & Poor’s. The Nasdaq Composite Index measures the performance of all issues listed in the Nasdaq Stock Market, except for rights, warrants, units, and convertible debentures. The Dow Jones Industrial Average is computed by summing the prices of the stocks of 30 large companies and then dividing that total by an adjusted value, one which has been adjusted over the years to account for the effects of stock splits on the prices of the 30 companies. Dividends are reinvested to reflect the actual performance of the underlying securities. The MSCI EAFE Index is a float-adjusted market capitalization index designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI Emerging Markets Index is a market capitalization-weighted index composed of companies representative of the market structure of 26 emerging market countries in Europe, Latin America, and the Pacific Basin. The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000® Index. The Bloomberg US Aggregate Bond Index is an unmanaged market value-weighted performance benchmark for investment-grade fixed-rate debt issues, including government, corporate, asset-backed, and mortgage-backed securities with maturities of at least one year. The U.S. Treasury Index is based on the auctions of U.S. Treasury bills, or on the U.S. Treasury’s daily yield curve. The Bloomberg US Mortgage Backed Securities (MBS) Index is an unmanaged market value-weighted index of 15- and 30-year fixed-rate securities backed by mortgage pools of the Government National Mortgage Association (GNMA), Federal National Mortgage Association (Fannie Mae), and the Federal Home Loan Mortgage Corporation (FHLMC), and balloon mortgages with fixed-rate coupons. The Bloomberg US Municipal Index includes investment-grade, tax-exempt, and fixed-rate bonds with long-term maturities (greater than 2 years) selected from issues larger than $50 million. One basis point is equal to 1/100th of 1 percent, or 0.01 percent.

Mark Gallagher is a financial advisor located at Gallagher Financial Services at 2586 East 7th Ave. Suite #304, North Saint Paul, MN 55109. He offers securities and advisory services as an Investment Adviser Representative of Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. He can be reached at 651-774-8759 or at mark@markgallagher.com.

Authored by the Investment Research team at Commonwealth Financial Network.

© 2022 Commonwealth Financial Network®