FINANCE: Fiscal and Economic Changes This Fall

By Patricia Kummer; Kummer Financial Strategies- Highlands Ranch
Posted 9/8/13

Many deadlines are looming that will affect business owners and investors alike this fall.  2013 may go down in history as a pivotal time for both …

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FINANCE: Fiscal and Economic Changes This Fall


Many deadlines are looming that will affect business owners and investors alike this fall.  2013 may go down in history as a pivotal time for both fiscal and monetary policy in the U.S.  It is important to understand how some of these changes will affect your business and your balance sheet.

Foremost on the minds of anyone taking out a mortgage or living on a fixed income, is the outcome of the Federal Reserve Board’s position on Quantitative Easing III.  Already the subtle announcements in June and July by Chairman Bernanke that he “anticipates moderating the monthly pace of asset purchases later this year”¹ has the bond market in a tizzy. 

Historically there has been an inverse decline of bond prices against rising yields.  However, the bond market is already behaving as if the tapering of Fed stimulus has already occurred.  Mortgage rates are creeping up and the 10-year Treasury is recently the most-watched financial instrument on a daily basis.  As yields start to come off their high of 2.9%, bond holders should start to see a normalization of prices.  However until the tapering actually begins, no one knows what a reasonable yield on the ten-year will be.  In prior business cycles where interest rates rise, the ten-year Treasury has historically yielded in to four to 4.5 percent range. It is difficult to comprehend bond prices going much lower even though we are not at those historic yields yet.

Chairman Bernanke’s term expires by January 2014.  It is likely his replacement will be announced sometime this fall.  This adds more uncertainty as how the change in leadership will affect the Fed policy on the amount and timing of stimulus tapering. 

Next we have the implementation of the Affordable Care Act (ACA) which is scheduled to take effect on October 1.  This includes possible health insurance changes in order to cover those that fall into a gap.  The main concern is that the ACA has not been fully funded yet and therefore uncertainty remains.

There expected to be delays in the implementation and funding decisions, however the verdicts closely precede upcoming mid-term elections for Congress.  It will be interesting to see how this plays out on both sides of the aisle with elections in the balance.  If your group or individual health care plan is up for renewal, it will be crucial to get with your insurance provider and understand what changes to expect both in cost and benefits.

The third big-ticket item to deal with this fall will be the state of the U.S. Fiscal Policy.  Legislators will need to be very nimble and pro-active to avoid a government shut-down.  They need to negotiate another increase in the debt ceiling while funding the government budget for 2014.  There is also another round of sequestration cuts scheduled for October 1.

According to Dr. Jerry Webman, Chief Economist for Oppenheimer Funds, “Investors should consider the potential for heightened volatility as these events approach.”


  1. Oppenheimer Commentary by Dr. Jerry Webman 8.19.13.

Patricia Kummer has been an independent Certified Financial Planner for 27 years and is President of Kummer Financial Strategies, Inc., a Registered Investment Advisor in Highlands Ranch, 4 year Top Wealth Manager 5280. She welcomes your questions at or call the economic hotline at 303-683-5800.Any material discussed is meant for informational purposes only and not a substitute for individual advice.


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