5/19/2014 Why Are Bond Yields So Low?

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Why Are Bond Yields So Low?Weekly Update - May 19, 2014

In This Issue

Quote Of The Week

Recipe Of The Week

Tax Tips

Golf Tip

Healthy Lifestyle

Green Living

After several days of negative performance, stocksrallied in the last two days to close generally flat. For theweek, the S&P 500 lost 0.03%, the Dow fell 0.55%, andthe Nasdaq gained 0.46%.[1]

Economic data last week was generally ho-hum except for two reports. Weeklyjobless claims plunged to their lowest level in seven years, giving investors hopethat the labor market is moving into high gear. Keep in mind that this measure ishighly volatile, and it's wise to wait and see if the trend continues.[2]

Another report showed an unexpected jump in April housing starts, which couldindicate the beginning of resurgence in the housing market. Groundbreaking onnew houses surged 13.2% in April as warmer weather and rentals buoyeddemand for multi-unit buildings.[3]

Investors who watch bond markets have probably noticed a puzzling downwardtrend in bond yields. Despite several new records for major stock indexes and aneconomy that might be reaching escape velocity, the yield on benchmark 10-YearTreasury bonds have been on a downward trend since the beginning of the year.

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To give you a quick refresher, bond yields and bond prices are inversely related,meaning that as demand for bonds goes up, yields come down. Conversely, bondyields go up when demand falls. Typically, stronger economic performance leadsto higher Treasury yields. Given recent stock market highs and better economicperformance, we should see demand for Treasury bonds to go down as investorsembrace risk and seek greater returns elsewhere. In fact, we're seeing theopposite.

There are a few factors that may be contributing to the demand for Treasuries:[4]

Inflation is still muted. Higher inflation generally leads to higher interest ratesand higher bond yields.The Fed doesn't appear to be in a hurry to raise interest rates, puttingdownward pressure on yields.The European Central Bank has pledged to lower interest rates to spureconomic activity, driving up demand for U.S. bonds.U.S. debt is attractive to investors seeking high liquidity and lower defaultrisk.Global jitters from the crisis in Ukraine are pushing investors into Treasurybonds.

What does this all mean for investors?

It's hard to know exactly where bond yields will go, but many analysts think thatdemand will remain high for the foreseeable future. Lower borrowing costs mayspur business activity as companies are able to lower financing costs andprospective homebuyers can find mortgages at attractive rates. While therelationship between bond markets and stock markets is complex, lower bondyields might support higher stock prices as investors seek higher returns. On theother hand, frazzled investors may see plummeting Treasury yields as a sign thatthe economy is not picking up and turn bearish on equities.[5]

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Looking ahead, this week is fairly light on economic data, but the housing marketwill be in the spotlight as analysts determine whether home sales data supportsthe upward trend in housing starts. Elsewhere, several important Fed economists,including Janet Yellen, will be speaking about the economy throughout the week,and the minutes from the most recent FOMC meeting will be released.[6]

ECONOMIC CALENDAR:

Wednesday: EIA Petroleum Status Report, Janet Yellen Speaks 11:30 AM ET,FOMC MinutesThursday: Jobless Claims, PMI Manufacturing Index Flash, Existing Home SalesFriday: New Home Sales

"Discover what you want most of all in this world,

and set yourself to work on it."

- John Homer Miller

Lemon Almond Macaroons

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These delicious cookies can be made in just one hour. Ingredients:

Makes 24-32 cookies

1 14-ounce package sweetened shredded coconut1 cup sliced almonds3/4 cup sugar1 teaspoon grated lemon zest1/4 teaspoon kosher salt4 large egg whites (whipped if you want crunchier macaroons)

Directions:

1. Pre-heat your oven to 325°F.2. Combine coconut, almonds, sugar, lemon zest, and salt in a large bowl.

Make a well in the middle and add in the egg whites, being careful not toover mix.

3. Using a spoon, drop mounds (approx. 2TB each) onto parchment linedbaking sheets, spaced about 1-2 inches apart.

4. Bake 20-25 minutes, switching baking sheets between racks halfwaythrough, until the edges brown.

5. Store in an airtight environment at room temperature for up to one week.

Recipe adapted from Sara Quessenberry | RealSimple.com

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Do You Qualify For a Health Insurance Exemption?

The Affordable Care Act requires individuals to have qualifying health insurancecoverage for each month of the year, have an exemption, or report a sharedresponsibility payment on his or her federal tax return.

You may be exempt from health insurance coverage if you:

* Cannot afford coverage because the annual premium is more than 8% of yourhousehold premium;* Have a gap in coverage of less than three consecutive months;* Qualify for an exemption based on hardship or belonging to an explicitlyexempted group.

For more information about the ACA or health insurance coverage requirements,contact a qualified financial advisor or visit IRS.gov/aca.

Tip courtesy of IRS.gov[11]

Get a Clue About Grip From Your Glove

A good grip is the foundation of a solid golf swing and the wear pattern on yourglove can help you diagnose possible problems.

A worn-out palm can be caused by gripping the club with your palm instead of

holding it below the heel pad of your fingers and hand.

Thumb tears can be caused by poor thumb placement and too much or too littlegrip pressure between your thumb and the club handle.

Index-finger wear can be caused by an overlapping grip where your dominant

hand's pinky digs into the glove hands knuckle.

Tip courtesy of Jeff Ritter | Golf Tips Mag[12]

5/19/2014 Why Are Bond Yields So Low?

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Recruit Activ ity & Workout Buddies

It's easy to allow lack of motivation and support to derail your activity plans.Surrounding yourself with family, friends, trainers, and workout partners can helpkeep you accountable and make activities much more fun.

Even if you can't find an obvious choice, keep your eyes open for a neighbor,colleague, friend, or fellow gym-goer that might be interested in partnering up.

Tip courtesy of AARP[13]

May is National Bike Month

To celebrate national bike (as in bicycle) month, try leaving your car at home andmaking short trips by bike. By "burning fat not oil," you'll get some extra activity intoyour day and reduce carbon emissions by limiting car trips.

Make sure you have a mechanic look over your bike, always wear a helmet, andobey all traffic laws when on the road. If you're concerned about bike safety,consult a local cycling advocacy group for tips, maps, and organized rides.

Tip courtesy of AARP[14]

Share the Wealth of Knowledge!

Please share this market update with family, friends, or colleagues. If you wouldlike us to add them to our list, simply click on the "Forward email" link below. We

love being introduced!

Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or

protect against loss in periods of declining values.

5/19/2014 Why Are Bond Yields So Low?

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Diversif ication does not guarantee profit nor is it guaranteed to protect assets.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the

stock market in general.

The Dow Jones Industrial Average is a price-w eighted average of 30 signif icant stocks traded on the New York

Stock Exchange and the NASDAQ. The DJIA w as invented by Charles Dow back in 1896.

The Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market

and is considered a broad indicator of the performance of stocks of technology companies and grow th companies.

The MSCI EAFE Index w as created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the

performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia

and Southeast Asia.

The Dow Jones Corporate Bond Index is a 96-bond index designed to represent the market performance, on a total-

return basis, of investment-grade bonds issued by leading U.S. companies. Bonds are equally w eighted by maturity

cell, industry sector, and the overall index.

The S&P/Case-Shiller Home Price Indices are the leading measures of U.S. residential real estate prices, tracking

changes in the value of residential real estate. The index is made up of measures of real estate prices in 20 cities and

w eighted to produce the index.

The 10-year Treasury Note represents debt ow ed by the United States Treasury to the public. Since the U.S.

Government is seen as a risk-free borrow er, investors use the 10-year Treasury Note as a benchmark for the long-

term bond market.

Google Finance is the source for any reference to the performance of an index betw een tw o specif ic periods.

Opinions expressed are subject to change w ithout notice and are not intended as investment advice or to predict

future performance.

Past performance does not guarantee future results.

You cannot invest directly in an index.

Consult your f inancial professional before making any investment decision.

Fixed income investments are subject to various risks including changes in interest rates, credit quality, inf lation risk,

market valuations, prepayments, corporate events, tax ramifications and other factors.

These are the view s of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named

representative, Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the

named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is

believed to be from reliable sources; how ever, w e make no representation as to its completeness or accuracy.

Please consult your f inancial advisor for further information.

By clicking on these links, you w ill leave our server, as they are located on another server. We have not

independently verif ied the information available through this link. The link is provided to you as a matter of interest.

Please click on the links below to leave and proceed to the selected site.

[1] https://w w w .google.com/finance

[2] http://w w w .bloomberg.com/new s/2014-05-15/jobless-claims-in-u-s-decline-to-low est-level-in-seven-years.html

[3] http://w w w .reuters.com/article/2014/05/16/us-usa-economy-idUSBREA4E0F920140516

[4] http://money.cnn.com/2014/05/16/investing/bonds-interest-rates/

[5] http://money.cnn.com/2014/05/16/investing/bonds-interest-rates/

[6] http://w w w .cnbc.com/id/101681279

[7] http://w w w .cnbc.com/id/101680033

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[8] http://w w w .cnbc.com/id/101680143

[9] http://w w w .reuters.com/article/2014/05/13/us-usa-economy-idUSBREA4C0D820140513

[10] http://w sj-us.econoday.com/byshow eventfull.asp?fid=461298&cust=w sj-

us&year=2014&lid=0&prev=/byw eek.asp#top

[11] http://w w w .irs.gov/uac/New sroom/Find-out-if-You-Qualify-for-a-Health-Insurance-Coverage-Exemption

[12] http://w w w .golftipsmag.com/instruction/slicing/quick-tips/glove-secrets.html#.U3jKlK1dVsI

[13] http://w w w .aarp.org/health/healthy-living/info-01-2014/get-f it-martina-navratilova.2.html

[14] http://blog.aarp.org/2013/04/09/save-on-gas-w hen-you-travel-this-summer/?intcmp=AE-ENDART2-BL-BOS

Marc Wolff

Southern Trust Financial Planning

1943 Morrill Street, Suite 1

Sarasota, FL 34236

941-308-0041

mwolff@southerntrustfinancial.com

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Southern Trust Financial Planning | 1943 Morrill Street, Suite 1 | Sarasota | FL | 34236