May 2, 2022—Inflation risk is to the downside for the first time in more than a year and the Federal Reserve (Fed) is likely to hike less than the current market pricing of 10 more hikes (+2.5%) this year. Price pressures were already set to ebb of their own accord even before the Fed set out on a path to tighten financial conditions. The Fed has only hiked once, by 0.
“There are decades where nothing happens; and there are weeks where decades happen.” This quote—in addition to representing an exquisite irony—has proven as true in the first quarter of 2022 as it was when it was said by founder of the Russian Communist Party Vladimir Lenin over 100 years ago.The last few months has seen an escalation of economic, market, and geopolitical risks across the globe. The S&P 500 has responded with the first negative quarterly return in two years.
April 6—As we entered 2022, even the onset of the omicron variant failed to shake markets’ optimism. With much of the world learning to cope with an endemic COVID-19 and rates set to rise, the stage was set for strong global growth. The last three months, though, have been less rosy than we might have hoped. From the Russia/Ukraine conflict to inflation surprises, investors would be hard-pressed to say they were anticipating this level of macro uncertainty.