Higher for How Much Longer?
Portfolio strategists offer their analysis on inflation, the banking crisis, the Fed, and prospects for a soft or hard landing.
- The macroeconomic narrative shifted between soft, hard and no landing scenarios as the markets adjusted to the fact that strong growth doesn’t necessarily lead to higher inflation – and rates may be higher for longer.
- While the sudden banking crisis at the beginning of March was a market shock, it does not have much in common with the Global Financial Crisis in 2008.
- Lending standards are much higher today, the Fed acted quickly to prevent negative feedback loops, and the impacts were limited to a handful of banks in San Francisco and New York.
- The data shows that the economy may not be as credit-sensitive as we think – and that reduces the odds of a hard landing.
- One takeaway: Despite the drama, the banking issue didn’t push the equity markets to new lows – volatility is starting to compress again.
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