March’s interest rates (for those retiring before July 1st, 2019) have dropped significantly but this is in line with our expectations.  The drop was largely due to the Federal Reserve indicating another shift in its outlook and hinting it may consider lowering interest rates sometime later this year or in early 2020.  This is a significant reversal from its policy just six months ago when the focus was clearly aimed at aggressively raising rates.

Another notable development, which may have farther reaching implications, occurred late last month when short term bond rates edged higher than longer term bond rates.  This is known as an “inverted yield curve” and has accurately predicted the past seven U.S. economic recessions. Historically speaking, a recession has occurred about a year after a yield curve inversion. While this measure of economic forecasting is widely recognized, it should be noted that it is not always a guaranteed indicator – it has given false positives in the past.  Case in point – this inverted yield curve was largely caused by the Federal Reserve Board’s pivot on interest rates and NOT because of a downturn in economic activity, leading many economists and scholars to question if this situation will turn out to be a false positive indication.  

Why is this so important to you? The reason is because BP’s pension is largely tied to interest rates, especially if you’re a Heritage employee.  As interest rates drop lower, pension lump sum values generally go higher, so the timing of when you exit BP is especially important.  If our currently strong economic conditions begin to deteriorate as implied by the inverted yield curve, then we would expect to see interest rates begin to decline along with economic activity.  Simply put, if this indicator is accurate then we should see pension values begin to rise substantially in approximately 12-18 months.

If you are considering retiring within the next one to two years we would highly encourage you to talk with one of our retirement planning specialists who can help you understand what your potential retirement timeline looks like and how to strategically plan your exit.

If you are a Heritage employee, but do not know how to verify which formula you are receiving, please contact our office directly and we will assist you free of charge and with no obligation.

If you would like to discuss your personal situation in more detail, please reply to this email or call 877-739-6007 to schedule a private consultation. There is no charge for this service to BP Employees.


Tyler E Ryan

Capstone Wealth Advisors



Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful. 

Stock investing involves risk, including loss of principal. International & Emerging Markets investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets. 

Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.

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