SoFi Blog

Tips and news—
for your financial moves.

The Fed is Still a Far Way From Tightening

We had a good jobs report on Friday, adding 195K workers in June with unemployment holding at 7.6%.  And we had some good revisions to previous numbers as well, pushing the three month average to nearly 200K a month.  The bond market sold hard on this news, with a quantitative easing (QE) exit all but certain to start in September and tightening being priced in for late 2014.  While I’m not one to catch a falling knife – e.g., stand in the way of the one-way bond market sell-off, I think tightening doesn’t happen until 2017.

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The Return of King Dollar

King dollar is back.  For the last decade, the dollar has generally been inversely correlated to the S&P 500.  When markets were up, the dollar was down versus most other currencies.  Higher markets were associated with lower volatility and greater risk appetite – the “Risk On” trade.  Investors would short dollars and buy higher yielding currencies like the Australian Dollar, Brazilian Real and Norwegian Krone.  On a risk-adjusted basis, these carry trades had an attractive Sharpe ratio and were the lifeblood of too many hedge fund managers (collecting 2/20 on carry is almost criminal, but that’s another story).

It’s good to be the king, while it lasts…

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When to Prepay Your Student (and Other) Loans

With some of our borrowers getting bonuses and moving up in their careers, I’ve gotten a few questions about when one should pay off their student loans.   I’ll answer that here (spoiler: it depends).  I’m going to caveat this blog by saying I’m not a financial planner, these are my opinions only and you should independently get planning and tax advice from your advisor.  Now with the legalese out of the way, on to the blog.

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