- This has been a historically difficult start to the year across stock and bond markets.
- Food and energy costs are driving inflation expectations, but while one-year ahead expected inflation is high, the three-year number is more in line with historical norms.
- Food and energy account for about 12% of consumers’ wallets now, compared to 2% several years ago.
- While mortgage rates are higher, demographics – the large Millennial generation – still favor home buying.
- Supply chain woes are easing somewhat, and there are indications that inflation and interest rates may be nearing a peak.
- One key risk in the second half: If inflation remains high, the Federal Reserve will need to be more aggressive with its interest rate increases.
Shift of Dismay: Inflation, Markets & Volatility at Midyear
Portfolio strategists discuss inflation, rate hikes, the potential for recession, US consumers – and where the markets could go from here.
This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions contained herein reflect the subjective judgments and assumptions of the authors only and do not necessarily reflect the views of Natixis Investment Managers, or any of its affiliates. The views and opinions are as of June 23, 2022, and may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted, and actual results may vary.
All investing involves risk, including the risk of loss. Investment risk exists with equity, fixed income, and alternative investments. There is no assurance that any investment will meet its performance objectives or that losses will be avoided. Investors should fully understand the risks associated with any investment prior to investing.
CFA® and Chartered Financial Analyst® are registered trademarks owned by the CFA Institute.