CW Advisor Solutions CW Advisor Solutions
  • Partnerships
    • Strategic Partnership
    • Continuity & Succession
  • Resources
    • Financial Planning
    • Investment Management
    • Practice Management
    • Continuity & Succession Planning
    • Operations Management
    • Compliance
  • Team
  • Insights
    • Articles
  • Advisor Center
CW Advisor Solutions CW Advisor Solutions
  • Partnerships
    • Strategic Partnership
    • Continuity & Succession
  • Resources
    • Financial Planning
    • Investment Management
    • Practice Management
    • Continuity & Succession Planning
    • Operations Management
    • Compliance
  • Team
  • Insights
    • Articles
  • Advisor Center
Jun 23

Don’t look now but inflation is peaking

  • June 23, 2022
  • CWA Investment Team
  • Richard Barrett

Higher prices have led to tighter financial conditions. Mortgage rates up a lot, gasoline prices up a lot, UST yields higher, credit spreads wider. For the past five months, both the bond and stock market has basically been doing the Fed’s job for it – tightening financial conditions in the face of higher prices.

Tighter financial conditions will destroy demand, and that phenomenon is already underway. In the past week alone, housing starts looked soft, UST yields have started to fall, mortgage rates have started to fall, fed fund futures have started to fall, and gasoline futures have started to fall. Money supply – the source of the inflation – is cratering lower. As demand declines, inflation expectations should also fall. In the past two months, forward inflation expectations (measured in the bond world as “5 year breakevens”) have fallen -75bps. Still elevated but now declining. That’s a good thing for overall price pressures and an excellent thing for those looking for less market volatility.  

The Fed might spend the rest of 2022 playing catch up and hiking rates, but do not be surprised to see them reverse course in a year’s time and actually start cutting rates in mid 2023 as the economy softens due to demand destruction. The Fed never misses an opportunity to miss an opportunity. I think they are cutting rates by June 2023. 

Source:  EISI as of June 22, 2022

Richard Barrett
Chief Investment Officer


Congress Wealth Management LLC (“Congress”) is a registered investment advisor with the U.S. Securities and Exchange Commission (“SEC”). Registration does not imply a certain level of skill or training. For additional information, please visit our website at congresswealth.com or visit the Investment Adviser Public Disclosure website at www.adviserinfo.sec.gov by searching with Congress’ CRD #310873.

This note is provided for informational purposes only. Congress believes this information to be accurate and reliable but does not warrant it as to completeness or accuracy. This note may include candid statements, opinions and/or forecasts, including those regarding investment strategies and economic and market conditions; however, there is no guarantee that such statements, opinions and/or forecasts will prove to be correct. All such expressions of opinions or forecasts are subject to change without notice. Any projections, targets or estimates are forward looking statements and are based on Congress’ research, analysis, and assumption. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and other sources may be required to make informed investment decisions based on your individual investment objectives and suitability specifications. This note is not a complete analysis of all material facts respecting any issuer, industry or security or of your investment objectives, parameters, needs or financial situation, and therefore is not a sufficient basis alone on which to base an investment decision. Clients should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed or recommended in this note. No portion of this note is to be construed as a solicitation to buy or sell a security or the provision of personalized investment, tax or legal advice. Investing entails the risk of loss of principal.

  • Facebook
  • Twitter
  • LinkedIn
  • E-Mail

Related Posts

  • Looking under the hood at credit trendsFebruary 27, 2024
  • EDSP = Earnings Drive Stock PricesFebruary 20, 2024
  • Fed cuts just got pushed to MayFebruary 13, 2024
  • Lots of market cap created very, very quicklyFebruary 5, 2024

Comments are closed.

Receive our newsletter

Subscribe

Advisor Solutions Team

Advisor Solutions Team focuses on the independent and breakaway financial advisor, addressing common strategic and managerial issues associated with building a profitable practice.

CWA Investment Team

Provides commentary on their view regarding trends in the markets.


Articles

  • Advisor Solutions Team (18)
  • CWA Investment Team (248)

Tags

Carl Noble Compliance Financial Advisors Gary Seifrit Industry Trends Investments Richard Barrett Ryan Carroll Sauro Locatelli Sean Dillon Senior Citizens

Archives

Office headquarters

155 Seaport Blvd
Boston, MA 02210
Phone: (617) 428-7600 Fax: (617) 428-7699

Form ADV
Form CRS
Legal Disclaimers
Privacy Policy

Follow us

  • linkedin

Contact us via email

    © CW Advisor Solutions
    CW Advisor Solutions (CWAS) is a division of CW Advisors, LLC (CWA), which is a registered investment advisor with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. For additional information, please visit the Investment Adviser Public Disclosure website by searching with CWA's CRD #310873. Investment Advisory services are offered and rendered through CWA. CWA acquired Pinnacle Advisory Group, Inc. (Pinnacle) on April 30, 2021.