In our post from last week, we noted that the rate of change for economic growth and inflation will likely slow in 2022.  This tends to lead to lower interest rates and flatter curves, which in turn causes rate sensitive and higher-quality factors to outperform commodity and low-quality factors.  A similar dynamic occurred in the...Read More

We believe the rate of change for inflation will likely slow in 2022 compared to 2021.  Some of this impact will be driven by difficult comparisons due to the large increases experienced in 2021.  Source: FRED. Some of the larger components of the consumer inflation basket also have difficult comparisons in 2021.  Home prices increased...Read More

The Federal Reserve held a meeting last week to discuss the state of the economy and update their policy stance.  At the conclusion of the meeting, they determined that inflation rates could remain above their target level, and they will start to become less accommodative in the coming months.  Part of this change in policy...Read More

The direction of inflation has been a topic of debate for several months and something we have written about for over a year.  Until recently, the market and economic data had suggested that the rate of change for inflation would be positive.  The November Consumer Price Index (CPI) made a new multi-decade high of 6.8%...Read More

This was another volatile week but provided some more signals regarding how investors are viewing growth and inflation trends in the U.S. and global markets, the impact of the new variant, and the diverging trends across different asset classes and geographies. In the commodity space, energy-oriented areas like oil and natural gas declined again and...Read More

The announcement of a new variant of COVID-19 contributed to a sizeable move across multiple asset classes last week.  It is too early to tell what the impact will be on the economy going forward, so we will have to watch the market signals for guidance on what impact investors expect the variant to have...Read More

There has been some volatility across asset markets in the fourth quarter. Reviewing the market signals across multiple asset classes could provide some insight into the likely direction of economic activity for the remainder of 2021 and into 2022. On the negative side, gold has been rising since the end of the third quarter (remains...Read More

Last month, we discussed the decline in payroll data and noted that it was likely to be temporary as COVID cases declined. The labor report for the month of October is the first update confirming that view. Private payrolls increased by 604,000 in October, up from 365,000 in September. The prior two months were revised...Read More

The official confirmation that economic growth slowed in the third quarter was released this week as the GDP report showed that the annualized growth in Q3 was 2.0% compared to 6.7% in Q2.  The year-over-year growth rate declined to 4.9% from 12.2%.    Source: FRED. This decline in activity was well anticipated by investors and...Read More

Early this month, we suggested that economic data in the fourth quarter would likely increase compared to the third quarter.  A major contributor to that viewpoint was the expectation that services data would improve.  Last week, the Markit Flash PMI report provided the first piece of evidence that this is occurring.  In the IHS Markit...Read More