By Ricardo Ferreira | August 2025
At Paragon Wealth, in Doylestown, we believe clarity and discipline are especially valuable when markets send mixed messages.
If you’ve been reading headlines lately, you might assume the U.S. economy is teetering—slower job growth, no clear signal from the Fed, and persistent grumbling about inflation. But under the hood, things are far more nuanced—and surprisingly constructive if you zoom out just a bit.
Let’s start with what the bond market is whispering.
What the Bond Market and Interest Rates Are Telling Us
The 2-year Treasury yield is currently 3.72%, while the Fed Funds lower bound is 4.25%. That’s not just a technical mismatch—it’s a signal. Historically, when short-term yields are below the Fed’s policy rate, the bond market is pricing in future rate cuts. In this case, it’s signaling 100 to 150 basis points of easing (that’s financial-speak for 1% to 1.5%) over the next two years. In other words, the bond market thinks the Fed will start cutting in the next 6 to 9 months.
At the same time, bond yields—while drifting a bit lower—still present better income opportunities than we’ve seen in over a decade. For clients with income needs, we’re being intentional about how we balance yield, risk, and flexibility—especially across taxable and tax-advantaged accounts.
The Economy: Not Booming, Not Breaking
The unemployment rate is holding steady at 4.2%, and even though last month’s job gains were a little underwhelming, a closer look tells a different story. Aggregate hours worked and wages are both at record highs. That’s not what a collapsing labor market looks like.
Companies aren’t firing workers—they’re just hiring a little more cautiously. Blame that on renewed tariff uncertainty, which has added just enough friction to make hiring managers pause. The good news? Productivity is likely surging, which bodes well for earnings growth and economic efficiency down the road.
Earnings Season Delivers (Again)
More than 80% of S&P 500 companies have reported Q2 earnings—and the majority beat expectations. Some sectors are leading the charge:
- Communication Services
- Technology
- Financials
On the flip side, Energy, Materials, and Consumer Staples have lagged. But that’s the beauty of diversified equity investing—sectors rotate, and the market is a constant game of tug-of-war.
UnitedHealthcare and Healthcare’s Rough Patch
The Healthcare sector has had a tough year, and UnitedHealthcare (UNH) has been a big reason why. Their Medicare Advantage unit ran into trouble due to underpricing and rising costs, forcing the company to suspend guidance and bring back former CEO Stephen Hemsley from retirement.
They’re trying to regain a 13%–16% growth trajectory, but between regulatory pressure and underwriting challenges, insurance continues to prove it’s a hard business to love. Meanwhile, Big Pharma has been dealing with tariff anxiety and political pressure from—you guessed it—the Trump administration.
A Bright Spot in Materials: MP Materials
Despite the broader sector’s underperformance, MP Materials has been a standout, rallying over 300% year-to-date. In July, the Department of Defense became its largest shareholder, investing $400 million to develop a rare-earth magnet factory and secure the domestic supply chain. Not long after, Apple announced a $500 million multiyear deal with MP to source magnets for its devices—a clear win for reshoring critical tech components.
This isn’t a recommendation to buy MP Materials or Apple—but it’s a helpful reminder: the market is a collection of individual stories, and there’s always something happening beneath the surface.
Seasonal Volatility, Process & Staying Disciplined
Historically, the period from August through mid-October tends to be a bit choppier for markets. Volatility picks up—sometimes for good reason, sometimes just because it’s that time of year. We’ve seen this pattern play out before, and we’ve been proactive in preparing for it while staying true to our investment process.
Periods of turbulence are rarely fun in the moment, but they often serve up opportunities—particularly to pick up high-quality businesses at more attractive prices. Our investment discipline remains grounded in long-term fundamentals, diversified positioning, and thoughtful rebalancing—not short-term prediction or reaction. That framework has served us well in the past, and it continues to guide us today.
Looking Ahead: The Roaring 2020s Might Actually Be Real
This decade could look a lot like the 1950s, 1980s, or 1990s—periods defined by productivity, innovation, and compounding returns. Some long-term forecasters see the S&P 500 reaching 10,000 by the end of the decade.
Why the optimism?
- AI-led capital investment is surging (tech spending hit a $2.1T annual run rate).
- Productivity trends have doubled since 2015 and could rise further.
- Consumer balance sheets remain strong.
- Inflation-adjusted incomes are rising, not falling.
As long as policymakers avoid major missteps, the case for a multi-decade bull market is intact. And for investors who stay disciplined, that’s a very encouraging backdrop.
Final Thought
The short-term headlines are messy, but when are they not? The structural story remains powerful. Whether it’s falling inflation, a resilient labor market, or quietly impressive earnings growth, the signs are there: the economy is adjusting, not collapsing. As always, we’re watching carefully and investing with discipline.
If you have questions about your portfolio, or want to talk through how current conditions may affect your financial plan, we’re right here in Doylestown. Let’s keep the conversation going.
About Ricardo
Ricardo J. Ferreira is the Portfolio Manager at Paragon Wealth, a firm he co-founded with Charlie McNamara, III, and Phil Rosenau. Drawing on his passion for finance and a talent for solving complex financial challenges, Ricardo leads the firm’s investment strategies, ensuring clients receive personalized and forward-thinking solutions.
A decorated U.S. Navy Veteran, Ricardo served at N.A.E.S. Lakehurst and aboard the USS George Washington, where he worked in aviation support. After his military service, Ricardo studied economics at Liberty University and began his financial career at Prudential Financial, where he met his future partners, Charlie and Phil.
Outside of work, Ricardo enjoys spending time with his family. He is married to Tina, owner of Main Street Accounting & Tax, and they have two children. Active in his community, Ricardo participates in various local events and serves on the finance council at St. Jude Parish in Chalfont. A passionate runner, he can often be found competing in local 5k and trail races on the weekends.
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Disclosures
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Any mention of any individual company or stock is not a recommendation to buy or sell. It is for informational purposes only
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and does not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a registered investment advisor. Great Valley Group and Paragon Wealth Management are separate entities from LPL.
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.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.