The Federal Open Market Committee (FOMC) voted to start increasing the target range on the Federal Funds Rate last week, moving the range from 0-0.25% to 0.25-0.50%.  They also guided toward the possibility of six more increases by the end of 2022.  These changes in policy stance have led to increased conversations about the future...Read More

In several of the blog posts this year, we have been discussing our view that the rate of change for inflation will likely decline in 2022 compared to 2021 despite the increase in energy and other related commodities (here, here, here).  Our view was based on the combination of more difficult comparisons for consumer prices...Read More

One of the economic impacts of the recent military events taking place between Russia and the Ukraine has been a large increase in commodity prices (energy and some metals and agriculture).  This has been especially true for carbon-based energy prices in Europe that are dependent on Russia and commodities that are produced in the Russia/Ukraine...Read More

When the last Consumer Price Index (CPI) report was released, we wrote an article highlighting that although the year-over-year rate of change increased, other indicators were suggesting that investors did not expect that trend to continue.  Ahead of the next CPI update, we wanted to review the comparison set for some of the areas that...Read More

The year-over-year comparison set for economic data, especially consumer related data, is going to become more challenging starting in the month of March.  This is driven by a combination of weak data during 2020 leading to very high year-over-year growth in 2021 and fiscal stimulus boosting income and spending data.  We think that the year-over-year...Read More

The Consumer Price Index (CPI) for January reported a monthly increase of 0.60%, the same increase as December and lower than the increase in October and November.  The year-over-year change increased from 7.1% in December to 7.5%.  This increase in price measures is not being corroborated by other market signals and could end up being...Read More

Oil prices (West Texas Intermediate or WTI) have increased 40% from the low in early December 2021 to the highest level since 2014.  Source: Koyfin. This may lead to an increase in the monthly growth rate of inflation measures like the consumer price index (CPI) and the producer price index (PPI).  At the same time,...Read More

During the most recent Federal Open Market Committee (FOMC) meeting and press conference, chairman Powell reiterated that the committee intends to begin raising interest rates in 2022.  The bond market already reflects some of these changes and looks similar to the last time the FOMC was increasing rates in 2018 but with some important differences....Read More

Market signals across asset classes are suggesting that investors are likely pricing in an expectation of a deceleration in the rate of change for economic growth, inflation, and corporate fundamentals.  In the fixed income markets, longer-term interest rates declined into the end of last week and the thirty-year U.S. Treasury yield did not get back...Read More

Market signal strength trends tend to move away from cyclical/speculative factors and towards higher quality/defensive factors as the economic cycle slows.  Our view continues to be that the rate of change for economic growth and inflation will likely slow in 2022, leading to a continued strengthening in market signals for defensive areas.  Some of the...Read More