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.

Natixis Investment Managers Solutions Portfolio Strategists Jack Janasiewicz and Garrett Melson offer insight and analysis on the changing macro narrative in the first quarter, the banking crisis, 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.
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 March 2023, 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.

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