Hey everyone. Sooo … the Fed cut interest rates on Sept. 17.

You’re probably thinking:

Yep. Yep.

Fair point.

But here’s the thing:

Sometimes there’s value in pausing, taking a breath, and actually assessing the landscape before rushing to commentary.

I know — that’s a shocking concept in this 24-hour news cycle. It’s counterculture to the way mainstream media operates.
​
But it means we get the benefit of zooming out, taking a wider perspective, and discovering — after pausing and assessing the landscape — what actually mattered versus what was just noise.

Sometimes the best analysis comes after the headlines fade.

The day after the Fed cut rates, headlines screamed about the fact that mortgage rates ticked up slightly. People were confused, and that became the dominant conversation on financial social media on Sept 18.

Now that the dust has settled, we can see the bigger picture.

So let me give you a wide-lens October economic update — where we stand right now, and what it means for you.

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#1: “Buy the Rumor, Sell the News”

On Sept 17, the Fed cut rates by a quarter point. This was so widely expected that the markets had already priced in a 100 percent probability it would happen.

In fact, prior to the Fed meeting, futures markets were betting 91 percent on a quarter-point cut and 9 percent on a half-point cut.

Here’s what’s interesting:

The day after the cut, mortgage rates actually ticked up slightly. People freaked out. “Wait, the Fed cut rates but my mortgage rate went up? What’s happening?”

The reason is simple: markets had already adjusted for the cut before it happened.

This is what former Fed economist Karsten Jeske (“Big ERN”) refers to as “buy the rumor, sell the news.”

When everyone knows something is coming, the market moves in anticipation. Then when it actually happens, there’s no new information to react to.

Therefore, if you want to capitalize on a Fed rate cut, the best time to do it is before it happens.

Fortunately, there’s still time for that. The Fed is widely expected to announce two more cuts this year, on Oct 29 and Dec 10.

“It seems that the market is pricing in back-to-back rate cuts for the rest of this year,” Karsten told me in our recent podcast interview. “One in this [September] meeting, one in October and one in December.”

He and I sat down together in Portland, Oregon last month for a livestream interview about what the anticipated series of rate cuts might mean for you.

If a person is thinking about buying, selling or refinancing their home, but they have the benefit of flexibility, when is the ideal time?, I asked.

He answered using a stock market analogy.

In other words, now. October through December.

But if you can’t make a move right away, that’s fine. Because the markets are anticipating future cuts in 2026 as well.

So where do we stand now?

As of the week of Oct 5th, the weekly national average for a 30-year fixed-rate mortgage was 6.37 percent, according to Bankrate. That’s pretty close to the 52-week low of 6.26 percent.

Here are two pieces of context that matter:

First, 6.37 percent is actually pretty average when you zoom out to a 40-year view. These rates just feel high because we got spoiled by the 2008 to 2020 era, when rates were historically low. That period was the exception, not the rule.

Second, the bigger story is the lock-in effect. According to National Mortgage Professional, 80 percent of existing homeowners have a mortgage rate below 6 percent. More than half — 52.5 percent — have a rate below 4 percent. And one in five homeowners has a rate below 3 percent.

This means most homeowners don’t want to sell, because they’d be trading their low rate for a higher one.

And that’s why there are very few buyers on the market.

— Existing homeowners, who have the benefit of equity — and therefore could qualify as buyers — are trapped by “golden handcuffs.”

— Aspiring first-time homeowners feel frozen out through the one-two punch of surging home prices (relative to 2020) and high interest rates.

Result: A lack of buyers on the market, which makes it a (low competition!) fantastic buyer’s market for the people who qualify.

This window won’t last forever, but it will likely stay in place for the rest of 2025 and at least the early part of 2026.

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#2: The Jobs Picture (What We Think We Know)

Here’s where things get weird.

There’s no official jobs report this month. The government shutdown means the Bureau of Labor Statistics hasn’t published its usual First Friday report.

​This is the first time I’ve ever had to say that.

But we do have data from ADP, which is a private payroll processor covering about 26 million U.S. workers. According to ADP, we lost 32,000 jobs in September.

The pattern is striking: the smaller the company, the harder it got hit.

 Companies with 500+ employees actually added 33,000 jobs

 Companies with 250-499 employees lost 9,000 jobs

 Companies with 50-249 employees lost 11,000 jobs

 Companies with 20-49 employees lost 21,000 jobs

 Companies with 1-19 employees lost 19,000 jobs

So big companies are doing fine. Small companies are struggling.

The big reveal is coming in early November.

Federal employees who resigned earlier this year and received severance packages — those packages mostly expired at the end of September.

This means October will be the first month when those former federal workers are officially counted as unemployed.

So tune into my November First Friday episode (Apple | Spotify) (air date: Friday, Nov 7) for what’s sure to be one of the most anticipated jobs reports in a while.

What does all this mean for you?

Short answer: The labor market is softening, but it’s not collapsing.

If you have a job, you’re probably fine.

If you’re job hunting, it might take longer than it used to.

If you’re a small business owner, you’re navigating a tougher environment than big companies are.

And if you’re wondering, “How can the economy be strong, if we’re losing jobs?” —

Here’s the answer in one graph:

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#3: Maybe 70 is the new 67

Here’s something that got a lot of attention recently:

The Social Security Commissioner suggested that the full retirement age might go up to 70.

Right now, full retirement age is 67 for anyone born in 1960 or later.

But Social Security is heading toward insolvency. The trust fund that pays most benefits (OASI — Old Age and Survivors Insurance) is projected to run out of money in 2033.

What happens then?

Benefits don’t go to zero, but they get cut. If nothing changes, beneficiaries will receive 77 percent of scheduled benefits.

If OASI merges with Social Security’s Disability Insurance trust fund (which is another proposal that’s on the table), then it won’t become insolvent until 2034 and beneficiaries will receive 81 percent of scheduled benefits.

So basically, we’d kick the can down the road by a year. And improve things long term by 4 percentage points.

That’s not really a solution.

So what are the options to fix this?

One option: raise the full retirement age to 70.

According to the Congressional Budget Office, this would solve about half of the shortfall.

Half.

That means we’d still need other measures — like raising payroll taxes or increasing the income cap on Social Security taxes — to close the gap.

(This is why I like Roth accounts so much. I’m a big fan of locking in today’s tax rates.)

The last time Congress raised the retirement age was in 1983. They phased it in gradually over 33 years, increasing it by two months per birth year.

If they do it again, it would likely be a similar slow rollout, giving people decades to plan.

Here’s what you need to know:

If you’re currently in your 40s or younger, plan as if Social Security will give you less than you expect — or that you’ll need to work longer to get full benefits.

If you’re in your 50s or 60s, you’re more likely to be grandfathered in under current rules, since any changes will likely be phased in gradually.

Either way, this is why building other income streams matters.

One more thing: regardless of when you plan to claim Social Security, apply for Medicare within three months of turning 65.

If you don’t, you could face higher premiums for life. The penalties for delaying Medicare are permanent and unforgiving.

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So where does all this leave us?

Between Fed rate cuts that are priced in before they happen, a softening (but still strong) job market, and potential Social Security changes ahead, the economy is in a weird in-between phase.

It’s a recipe for being cautiously optimistic.

And that’s the opposite of how most people say they feel.

According to the University of Michigan, consumers say they’re pessimistic — consumer sentiment in September fell to its lowest level since May — but they’re still spending at increasing rates.

​Consumer spending rose by 0.6 percent in August, following increases of 0.5 percent in both July and June.

That disconnect between how people feel and how people act is one of the more fascinating economic stories right now.

My philosophy?

Focus on what I can control: building income streams, staying informed, and making moves when opportunities appear.

 

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It wasn’t a big surprise that Federal Reserve Chairman Jerome Powell cut interest rates at the Fed’s September meeting on Wednesday. In July, he implied in no uncertain terms that a rate cut was coming, and the likelihood was that it was going be a quarter of a point. That’s what has happened. The governing body also signaled that two more cuts would come at its next two meetings, in October and December.

Powell noted that there are mixed signals in the economy, which made it a difficult decision. Normally, the Fed keeps rates high until inflation backs down, and right now, inflation is higher than the Fed wants it to be. Nonetheless, the once-strong job market is beginning to falter, and a reduction in interest rates should stimulate the economy and employment opportunities.

A more active economy with more jobs and money flowing is great news for most businesses, and some companies will feel the change more acutely. Visa (V 1.19%), SoFi Technologies (SOFI 4.96%), and Carnival (CCL -2.96%) (CUK -2.67%), are three stocks that should benefit in a big way.

1. Visa: The best indicator of spending habits

Visa is the largest credit card company in the world, and its performance tells the story of the economy to some degree. Because it’s a credit card network, its processed volume is a strong indication of how people are spending. And because it targets a wide range of demographics, its message is fairly universal.

The purpose of cutting interest rates is to boost the economy, and Visa is a major beneficiary of higher spending. Visa’s core business is providing the network, or infrastructure, that moves money from a customer’s partnering bank to a merchant, taking a small cut of each transaction. Although it has branched out to other services, they mostly center around different ways of moving money. More money flowing means more money for Visa.

It has been performing well despite the higher interest rates. In the 2025 fiscal third quarter (ended June 30), revenue increased 14% year over year, and payments volume was up 8%. It’s highly profitable, since it has a simple, low-cost model, and net income increased 8% over last year in the quarter.

Lower interest rates should further boost Visa’s earnings, benefiting this Warren Buffett-backed stock. Visa is a solid long-term investment, offering value to most portfolios.

2. SoFi: A young bank disruptor

Banks have a two-sided relationship with interest rates. They make more money on net interest income when rates are higher, but they also suffer from higher default rates because consumers struggle to pay back loans. They also take out loans at lower rates for that reason, and altogether, banks usually do better with lower rates.

That goes for the industry as a whole, but I’m picking SoFi in particular partly because of its large lending segment, and partly because it’s growing much faster than almost any other bank, which means it stands to gain a lot from an improving economy.

SoFi is a neobank, a cadre of digital banks that have no physical branches and offer a modern take on financial management. In addition to student, personal, and home loans, it offers a broad array of standard banking services and typically beats out national averages on savings rates for deposits.

It also offers non-standard services like cryptocurrency trading on its app, and it recently said it would offer international money transfers on a Blockchain network. That could offer real value, since sending money internationally is often a complicated, expensive, and long process.

SoFi’s lending segment struggled last year when interest rates were at a high, and it has already benefited from lower rates with accelerated revenue growth and better credit metrics. Even lower rates should help all of its segments, which, aside from lending, include financial services, like bank accounts and investing, and tech platform, which is a business-to-business financial infrastructure.

As it becomes a larger and more formidable player in finance, it should be able to weather future uncertainty even better.

3. Carnival: Great performance, high debt

Carnival is sailing through smooth seas as customers continue to sign up for its cruises. Demand is at historical highs, operating income is at a record, and the company is ordering new ships and launching new destinations to meet all of this demand.

There’s only one kink in the business: it has massive debt. It’s been paying it off responsibly, but it’s still more than $27 billion. This year, it has refinanced $7 billion at better rates, saving millions on interest. It will now be able to refinance more of its debt at lower rates.

Outside of the debt, the investment thesis for Carnival is strong. It’s the largest global cruise operator, and demand has stayed healthy despite high inflation. That’s resiliency.

Carnival stock is still cheap today due to the concerns about the debt, but as it pays it down and becomes more profitable, expect the stock to keep climbing.

Picture this: you’re at the Federal Reserve years ago. The chairman literally hangs up a conference call, waits 30 minutes, then calls back — suddenly everyone agrees on the rate decision. 

That’s the kind of insider story Karsten Jeske (“Big ERN”) shares when he joins us to break down what’s happening with the economy right now.

Karsten worked at the Federal Reserve Bank of Atlanta for eight years, then spent a decade on Wall Street at Bank of New York Mellon. 

Today he runs the popular Early Retirement Now website, where he applies his economist background to help people understand money and markets.

You’ll hear Karsten explain why the Fed is about to start cutting interest rates. The futures markets are pricing in a 90 percent chance of a quarter-point cut, with more cuts likely through the end of the year. 

But why? After all, inflation just ticked up in the latest CPI report, yet the Fed is still planning to lower rates.

We dive into how this affects real people. If you’re thinking about buying or selling a house, Karsten suggests acting sooner rather than later. 

He explains the “buy the rumor, sell the news” principle – the bond market may have already priced in the good news about rate cuts, so waiting might not help you.

The conversation covers some surprising economics too. Did you know that high interest rates can actually cause housing inflation? 

When mortgage rates are expensive, fewer people build new homes, which drives up prices. It’s the opposite of what most people think happens.

Karsten walks through the recent jobs report revisions that caught everyone off guard. The government had to subtract nearly a million jobs from their previous estimates. He explains how this happens – it’s not that officials are making up numbers, but tracking new businesses is genuinely hard to do in real time.

You’ll also learn about two Fed tools most people haven’t heard of: the dot plot and R-star. The dot plot shows where Fed officials think interest rates should go over time. R-star represents the theoretical perfect interest rate when the economy has no problems — currently around 3 percent.

The interview wraps up with Carsten’s take on Fed culture. The consensus-building era under Greenspan is giving way to more dissenting votes, which actually makes the central bank more like it was decades ago under Paul Volcker.

Enjoy!

 

Timestamps:

Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.

(0:00) Podcast introduction and guest background

(1:04) Carsten’s career path from Fed to Wall Street

(1:57) Current economic growth limbo state

(4:04) GDP formula and tariff impacts

(5:10) Trade efficiency and comparative advantage

(6:04) Supply chain threats from protectionism

(8:20) Fed meeting and rate cut expectations

(9:35) Market pricing in multiple rate cuts

(12:19) Real estate timing and mortgage rates

(13:55) How Fed rates affect treasury yields

(18:50) Buy the rumor, sell the news strategy

(22:13) Fed transparency and decision telegraphing

(25:56) Fed consensus culture versus dissent

(30:48) CPI data shows inflation ticking up

(34:32) Transitory versus persistent inflation confusion

(38:56) Fed behind the curve on rate cuts

(40:00) Major jobs report revisions explained

(44:24) Methodological issues with new business tracking

(46:00) Dot plot and R-star concepts explained

(52:29) Bond allocation strategies by age

(57:25) Current bond yields look attractive

 

Check out our previous interview with Dr. Jeske here.

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In an interview with CNBC on Thursday, Moody’s Analytics chief economist Mark Zandi said recent job numbers have been so dismal that it’s possible the U.S. may already be in a recession.

“I think the Federal Reserve desperately wants to avoid that kind of outcome,” he added. “Obviously nobody wants a recession. But also in the context of Fed independence, they really don’t want to get blamed for going into a downturn because that would impair their ability.”

Wharton finance professor Jeremy Siegel laid out just such a scenario in July, when he told CNBC that Fed Chairman Jerome Powell may need to resign in order to preserve the central bank’s long-term independence. 

His reasoning: If the economy stumbles with Powell still at the helm, then Trump can point to him as the “perfect scapegoat” and ask Congress to give the White House more power over the Fed.

“That is a threat. Don’t forget, our Federal Reserve is not at all a part of our Constitution. It’s a creature of the U.S. Congress, created by the Federal Reserve Act 1913. All its powers devolve from Congress,” Siegel explained. “Congress has amended the Federal Reserve Act many times. It could do it again. It could give powers. It could take away powers.”

Meanwhile, Stephen Miran is set to join the Fed—without resigning as chair of the White House’s Council of Economic Advisers—after previously calling for changes that would erode its independence before he joined the Trump administration.

In a note last month, JPMorgan said Miran’s appointment to the Fed “fuels an existential threat as the administration looks likely to take aim at the Federal Reserve Act to permanently alter U.S. monetary and regulatory authority.”

Fed rate cut

Despite the enormous pressure Trump has put on the Fed to lower rates, even trying to fire Governor Lisa Cook, central bankers have largely resisted his calls so far. But the sudden deterioration in the job market has made a rate cut a virtual certainty.

The Fed meets Tuesday and Wednesday, and the only question on Wall Street is whether rates will come down by 25 basis points or 50 basis points from the current level of 4.25%-4.5%.

In a note on Friday, JPMorgan chief U.S. economist Michael Feroli said he expects two or three dissents for a larger cut and no dissents in favor of keeping rates unchanged.

At the Fed’s last meeting Fed governors Christopher Waller and Michelle Bowman dissented from other policymakers by calling for a quarter-point cut. It’s possible they could dissent again by voting for a half-point cut, Feroli said, with Miran expected to “dutifully dissent for a larger cut” as well.

On Thursday, Zandi said the bar is high for a half-point cut, but “there’s a possibility we could get over that.” He added that a JPMorgan forecast for six cuts by the end of 2026 is reasonable, assuming a neutral level for the fed funds rate is about 3%.

“It’s possible if the economy is weaker and recession risk higher and concerns about Fed independence greater that we get something a little lower than that, 2.5% to 3%,” Zandi said.

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During a bull market, most investors get excited about chasing risk. Despite sky-high valuations, there’s a tendency to double down on even riskier bets in the hopes of making outsized gains. That’s human nature. Nobody wants to miss the boat, and everyone thinks they can outsmart the market.

In the process, boring assets like risk-free Treasury bonds usually get pushed aside. After all, who wants to buy a government bond when you can try your luck with a private AI startup or the latest growth stock darling?

But here’s the thing: I’ve been investing since 1996, and I’ve lived through multiple boom-and-bust cycles. Just when you think you can’t lose, you sometimes lose big. And just when you’re convinced the good times will never return, the market surprises you with a rebound.

The real key to being a successful DIY investor isn’t finding the perfect stock—it’s having the discipline to maintain your asset allocation. If you can reduce your emotional volatility and stick to your investing plan, you’ll build far more wealth in the long run than if you’re constantly chasing FOMO.

And that brings me to a point that often gets overlooked: Treasury bonds can appreciate in value too. Don’t sleep on them.

Why Treasuries Deserve More Respect

In a previous post, I talked about how 20-year Treasury bonds yielding ~5% were attractive for retirees or anyone who’s already financially independent and doesn’t want to trade time for money. Google News even picked it up, but the reaction was lukewarm. Most readers weren’t interested—because it’s a bull market. When stocks are roaring higher, nobody wants to hear about bonds.

But as a semi-retiree and disciplined asset allocator, I find any risk-free return above 4% to be highly attractive. Think about it: I believe in the 4% safe withdrawal rate, even though at most I’ve ever withdrawn is 2%. If I can earn 4% on my capital without touching principal, I essentially guarantee myself lifetime financial security. That peace of mind is priceless.

It also means that if my kids end up getting rejected from college and can’t find jobs, they’ll still inherit plenty. Worst case, they can sit around playing video games in the paid-off homes I bought for them before they were born. Not ideal, but at least they won’t starve.

Because I practice what I preach, I bought $150,000 worth of 10-year Treasury bonds yielding 4.25% at the end of June on the secondary market. I’d love to lock up 30–40% of my taxable portfolio in Treasuries yielding at least 4%. That gives me a steady foundation of risk-free income, while still leaving 60–70% of the portfolio available for riskier investments like stocks.

For context, this taxable portfolio is what my wife and I rely on to fund our lives as dual unemployed parents. Stability and income are priorities. For me, that’s the ideal setup in retirement.

The Overlooked Free “Call Option” in Bonds

When most people think of Treasury bonds, they imagine clipping coupons and getting their principal back at maturity. And that’s exactly what happens—you earn steady income, and there’s zero default risk. That’s why they’re called “risk-free.”

But here’s what many investors forget: long-duration Treasury bonds come with a free call option.

If interest rates fall, the market value of your bond rises. You don’t have to sell, but you have the option to. That flexibility is powerful.

• Hold to maturity → collect coupon payments and get all your money back.
• Sell before maturity → potentially lock in capital gains if rates have dropped.

This makes long-term Treasuries a two-for-one investment: you get steady income plus upside potential if rates decline.

My Treasury Bond in Action

The $150,542 worth of 10-year Treasuries I bought in June 2025 are already worth about $154,529—a 2.64% gain in just two-and-a-half months as Treasury bond yields have come down. That’s without even counting coupon payments.

I made the investment during a similar time I invested a total of about $100,000 in Fundrise Venture, as part of my dumbbell investing strategy. The vast majority of the proceeds came from selling my old house at a profit.

These bonds pay a 4.25% coupon semi-annually. That’s about $3,199 every six months, like clockwork. I’ll keep getting those payments until May 15, 2035, when the bond matures and I get my $150,542 back in full.

Earning guaranteed money while doing nothing feels like a dream come true, especially now that I’m growing tired of being a landlord. I’m thankful to my younger self for diligently saving and investing 50%+ of my income for 13 years.

But let’s run some scenarios:

• Rates drop 1% (from 4.25% to 3.25%) over two years.
  My bond suddenly looks far more attractive. New buyers would only get 3.25% from a fresh 10-year, while mine pays 4.25%. The market adjusts by bidding up my bond’s price by roughly 6.5%. On $150,542, that’s ~$9,785 in gains. Add in two years of coupon payments ($6,398), and I’d be up around $16,183—a 10.75% return, risk-free.
• Rates rise 1% (from 4.25% to 5.25%) over two years.
  My bond would decline about 5.2% in value. That sounds bad for a risk-free investment, but here’s the plan: if I just hold until maturity, I still get all my coupons and my principal back. In the meantime, I’d happily buy new Treasuries at 5.25% to lock in even more passive income.

That’s the beauty of Treasuries. Either way, you or I win. Sure, there’s inflation to contend with. However, every investment contends with inflation to calculate a real rate of return.

Do note that you do have to pay capital gains tax for both federal and state if you sell before maturity and have a gain. However, interest is subject only to federal income taxes, not state and local taxes if you hold until maturity.

How Much Treasury Bonds Can Appreciate Per Interest Rate Decline

Here’s a look at how a 10-year Treasury bond (4.5% coupon, $1,000 face value) increases in value for each 25 basis point decline in yield:

• 25 bps decline (4.50% → 4.25%): $1,020 (+2.0%)
• 50 bps decline (4.50% → 4.00%): $1,041 (+4.1%)
• 75 bps decline (4.50% → 3.75%): $1,062 (+6.2%)
• 100 bps decline (4.50% → 3.50%): $1,083 (+8.3%)
• 125 bps decline (4.50% → 3.25%): $1,105 (+10.5%)
• 150 bps decline (4.50% → 3.00%): $1,127 (+12.7%)
• 175 bps decline (4.50% → 2.75%): $1,150 (+15.0%)
• 200 bps decline (4.50% → 2.50%): $1,174 (+17.4%)
• 225 bps decline (4.50% → 2.25%): $1,198 (+19.8%)
• 250 bps decline (4.50% → 2.00%): $1,223 (+22.3%)
• 275 bps decline (4.50% → 1.75%): $1,248 (+24.8%)
• 300 bps decline (4.50% → 1.50%): $1,274 (+27.4%)
• 325 bps decline (4.50% → 1.25%): $1,301 (+30.1%)
• 350 bps decline (4.50% → 1.00%): $1,329 (+32.9%)
• 375 bps decline (4.50% → 0.75%): $1,357 (+35.7%)
• 400 bps decline (4.50% → 0.50%): $1,386 (+38.6%)

In other words, if the 10-year Treasury yield falls to 0.6%—its all-time low in March 2020—your 10-year Treasury bond could increase in value by 35% to 40%. More realistically, if yields drop to around 3%–3.5%, you could see roughly 8%–13% in price appreciation on top of the regular coupon payments. Not bad!

Why Higher Yields Are a Gift

The higher rates go, the more excited I get. That may sound strange, but here’s why: I believe the long-term trend for inflation and interest rates is down.

Technology, productivity gains, global coordination, and lessons from past cycles all act as long-term deflationary forces. These should eventually bring interest rates lower. Further, with the Fed restarting its rate cuts, I’m not sure today’s 4% – 5%-risk-free yields may not be around forever.

This is why I’m buying now. Locking in these yields feels like a gift to my future self who might no longer want to lift another finger writing posts to help all of you build more wealth and live freer lives.

Beyond Treasuries, I’m investing more in real estate again as they act like a bond plus investment. In other words, real estate has more upside during a declining interest rate environment, while also providing some downside protection from stocks.

Stocks + Treasuries: The Golden Combo

Right now, investors have the best of both worlds:

1. A bull market in stocks.
2. Still high risk-free yields in Treasuries.

That combination doesn’t come around often. But when it does, it is a dream come true for anybody who is FIRE.

When I retired in 2012 with about a $3 million net worth, I felt content with that amount, so I logically said goodbye to long hours. Remember, you’re not really financially independent if you do nothing to change a suboptimal situation. At the time, the stock market felt dicey, and bond yields were ho-hum at 1.5% – 2%. Fast forward to today: the stock market is multiple times higher, and yields are more than double. Talk about a fortunate setup.

Let’s do a thought experiment. Suppose you’ve diligently saved and invested 50%+ of your income for 30 years. Now you’ve got a $10 million portfolio: $6 million in the S&P 500 and $4 million in Treasuries yielding 4%.

• Stocks at 7% return → $420,000.
• Treasuries at 4% → $160,000.

That’s $580,000 of income a year before taxes, on a $350,000 annual spending budget. You wouldn’t even have to touch principal. If there’s another 20% bear market, as there likely will be, your portfolio will only decline by about 11%. Over the long term, your net worth would just keep compounding until you pass away with far more money than you’ll ever need.

Don’t Underestimate Treasuries

It’s easy to dismiss Treasuries as boring compared to AI startups or meme stocks. But that would be a mistake. They provide steady income, reduce portfolio volatility, and—if rates drop—they can deliver meaningful capital gains.

They’re not flashy, but they don’t need to be. Boring is beautiful when it comes to financial security.

So the next time you’re tempted to overlook Treasuries, remember: they can appreciate in value too. Sometimes, the least exciting investments are the ones that quietly build lasting wealth.

Readers, what are your thoughts on investing in Treasury bonds yielding 4% or more? Do you believe inflation and interest rates are headed lower, or will they rebound higher? And were you aware that Treasuries can also appreciate in value—not just pay steady income?

Suggestions To Build More Wealth

If you believe interest rates will trend lower over the next several years—as I do—investing in bonds and real estate can make a lot of sense. Beyond Treasury bonds, you might consider Fundrise, a private real estate platform managing over $3 billion in assets for more than 380,000 investors. Its portfolio of residential and industrial commercial properties is well-positioned to benefit in a declining rate environment.

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The Federal Open Market Committee (FOMC) had previously left rates unchanged at a range of 4.25% to 4.50% at its July meeting, despite internal disagreements, growing signs that economic conditions warranted a more dovish approach, and mounting pressure from President Donald Trump on Fed Chair Jerome Powell to cut. The July jobs report, of course, is changing the picture rapidly.

The Labor Department reported a gain of just 73,000 nonfarm payroll jobs in July, well below consensus forecasts. More troubling were the significant downward revisions for May and June, which cut a combined 258,000 jobs from the previous estimates and reduced those months’ average gains to less than 20,000 jobs per month. While July’s number alone would not spell crisis, the back-to-back weakness and hefty revisions roused investor concerns about potential cracks forming in the U.S. labor market. Powell has repeatedly emphasized the balance between labor supply and demand, and said the unemployment rate is the “key indicator to watch.” July’s unemployment rate ticked up to 4.2%, just shy of a 12-month high, providing further evidence of softening conditions.

Market reaction was swift. Stephen Brown, Deputy Chief North America Economist for research firm Capital Economics, called it a “payrolls shocker.” He noted an immediate change in markets, which repriced the likelihood of a September rate cut at 85%, a jump from below 50% prior to the jobs data, as futures traders bet that the Federal Open Market Committee will need to respond to mounting evidence of economic softening.

“The July jobs report goes a long way toward providing the evidence of a weaker labor market that the Fed needs to justify cutting interest rates in the face of above-target inflation,” said Brian Rose, senior U.S. Economist at UBS Global Wealth Management, in a statement to Fortune Intelligence. Rose noted that GDP data had shown the economy’s growth slowing to an annualized 1.2% pace in the first half of 2025, well below the longer-term trend rate of 2.0%. “We expect soft data in the second half of 2025 as well. This should help to offset some of the inflationary pressure driven by tariff hikes,” he added.

Other recent data reinforce the picture of an economy under strain. Survey indicators such as the ISM manufacturing employment index fell further in July, while measures of business capital spending have only recovered modestly after disruptions following April’s “Liberation Day.” Meanwhile, President Trump’s new tariff measures have pushed up import costs, adding to the inflation outlook.

Fiendishly mixed signals

The July payroll dip, coming on the heels of the disruptive “Liberation Day” in April, may not yet herald a deeper jobs slide, other data suggests. Brown noted that initial jobless claims ticked down to 218,000 last week, and continuing claims have declined steadily since peaking in early June.

Analysts expect Powell to use the upcoming Jackson Hole Economic Symposium, to be held August 21–23, as an opportunity to signal the central bank’s readiness to act if labor market weakness persists and larger inflation effects from tariffs do not materialize.

Rose’s baseline scenario now sees the Fed resuming rate cuts at its September meeting and continuing to cut by 25 basis points each meeting through January, trimming the federal funds rate by a full percentage point to bring borrowing costs back to a “roughly neutral” level.

“Given this morning’s data, Powell may be willing to drop a hint that the Fed is leaning toward a September cut,” Rose said.

For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.