No Lasting Relief
May 13, 2022
Interest rates will go higher for longer, with attendant risks for both stocks and bonds. That was the message from this week’s data here and in Europe, reinforced by central bank comments. The five interconnected themes that we are watching this quarter – geopolitics, inflation, monetary tightening, jobs, and Covid – remain key to the outlook. This week’s bond market movements show that investors fear the Fed may overdo it and tip the US economy into recession.