With the latest — and much-foreshadowed — 75bps hike in the Fed Funds rate announced last week, interest rates have conclusively entered the realm of “constrictive,” i.e., serving to reduce economic growth by depressing final demand. This week’s inflation numbers will play an outsized role in determining the ultimate peak in short-term interest rates, which is now increasingly thought to be 5%+. Fueled by strong consumer spending data, the market’s expectation continues to increase for the terminal federal funds rate. While recent October equity gains have provided a welcome relief from the losses that have plagued markets this year, a combination of factors — downside risk to future earnings due to margin compression, relatively higher valuations, and the likelihood of a recession in the coming quarters — points to a less positive outlook for earnings growth in 2023. On the wealth planning front, the Treasury Department announced new I-Bond rates for the next six months. The bonds will earn a composite rate of 6.89% from Nov 2022 through Apr 2023 and is based on the CPI, otherwise known as inflation, from Mar 2022 to Sep 2022.
Click Here to Read the November 7, 2022, Economic Commentary
Click Here to Read the November 7, 2022, Investment Commentary
Click Here to Read the November 7, 2022, Wealth Planning Commentary
