28 Oct VIEWPOINTS NOVEMBER 2022
BUMPY PATH TO THE PEAK
We have written for months about elevated volatility being a recurring issue as long as the market was uncertain about how high interest rates were going. Higher than expected inflation reports in recent months have led to increased expectations around monetary policy, pressuring stocks, credit and increasing the risk of recession in the U.S. This report’s title, “Bumpy Path to the Peak,” refers not to a peak in the inflation rate, but in the Fed funds rate. After all, it’s the jump in interest rates and the resulting uncertainty about how high central banks will go that has unsettled markets. As shown below, headline CPI remains elevated relative to core producer prices (PPI) and the market’s benign expectations of future inflation. With an eye on current inflation, and little weight on forecasted inflation, the Fed is likely to continue its aggressive hiking campaign at least through early 2023.
Read the full article: VIEWPOINTS NOVEMBER 2022.
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