This week we present our Portfolio Allocation Summary for October 2022.
Highlights Chart 1A Hot Labor Market The balance of data that’s come out during the past month points to a labor market that is not cooling very quickly. In fact, it is cooling much more slowly than we anticipated.…
Highlights Chart 1Are Expectations Too Dovish? The bond market is now priced for the fed funds rate to peak at 3.44% in January and then head back down to 2.79% by the end of 2023 (Chart 1). We strongly push back against…
Highlights Chart 1Are Expectations Too Dovish? The dominant market narrative has clearly shifted in the last few days. The primary concern among investors used to be that the Fed had fallen behind the curve on inflation. Now…
Highlights Chart 1Wage Growth Is Cooling In a speech last week, Fed Governor Christopher Waller presented the theoretical underpinnings for how the Fed plans to achieve a soft landing for the US economy.1 The Fed’s hope…
Highlights Chart 1Past Peak Inflation The Fed is all set to deliver a 50 basis point rate hike when it meets this week and with inflation still well above target Chair Powell will be keen to re-affirm the Fed’s…
Executive Summary A housing slowdown has begun and it will proceed in three stages. First, rising mortgage rates will lead to slowing demand. Second, weak demand will push inventories higher and cause home prices to decelerate.…
Highlights Chart 1Reduce Credit Exposure Corporate bond spreads staged a nice rally during the past month. The average index spread for investment grade corporates is only 22 bps above its pre-COVID low and 33 bps above last…