Weekly Recap for The Week Ending December 16, 2022 – Hawkish Fed Startles Investors

The much anticipated December FOMC meeting took place this week and while the Federal Reserve (Fed) downshifted its rate hikes to 50 bps from 75 bps, the tone of the announcement was hawkish as the dot plot startled investors. The Fed is committed to taming inflation and doesn’t believe their job is close to being done, evidenced by its “higher for longer” stance. As a result, Fed officials are projecting rates will end 2023 at 5.1% before dropping to 4.1% in 2024, while investors were hoping for rate cuts in 2023. Furthermore, falling Treasury yields are defying Fed actions as bond investors fear the Fed is going to far. Investors are also looking at the deep inverted yield curve, which is signaling pain ahead. While Fed officials continue to signal that its fight against inflation is far from over, investors are again growing earful that the Fed will push the economy into a recession.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s