Investment Commentary – June 29, 2022
Year to Date Market Indices as of June 29, 2022
• Dow 31,010 (-14.47%)
• S&P 3,813 (-19.83%)
• NASDAQ 11,146 (-28.63%)
• Gold $1,820 (-0.55%)
• OIL $109.46 (45.10%)
• Barclay Bond Aggregate (-11.34)
• Fed Funds Rate 1.75-2.0
• Current Annual Inflation Rate 8.6%
Powell vows to prevent inflation from taking hold in the U.S. for the long run
Fed Chair Jerome Powell vowed Wednesday at an ECB forum that U.S. policymakers would not allow inflation to take hold of the economy over the longer term.
“There’s a clock running here, where we have inflation running now for more than a year,” the central bank leader noted.
Powell reiterated his tough talk on inflation in the U.S. that is currently running at its highest level in more than 40 years.
Federal Reserve Chair Jerome Powell vowed Wednesday that policymakers would not allow inflation to take hold of the U.S. economy over the longer term.
“The risk is that because of the multiplicity of shocks you start to transition to a higher inflation regime. Our job is literally to prevent that from happening, and we will prevent that from happening,” the central bank leader said. “We will not allow a transition from a low-inflation environment into a high-inflation environment.”
Speaking to a European Central Bank forum along with three of his global counterparts, Powell continued his tough talk on inflation in the U.S. that is currently running at its highest level in more than 40 years.
In the near term, the Fed has instituted multiple rate hikes to try to subdue the rapid price increases. But Powell said that it’s also important to arrest inflation expectations over the longer term, so they don’t become entrenched and create a self-fulfilling cycle.
“There’s a clock running here, where we have inflation running now for more than a year,” he said. “It would be bad risk management to just assume those longer-term inflation expectations would remain anchored indefinitely in the face of persistent high inflation. So we’re not doing that.”
Inflation report ahead
A report scheduled to be released on Thursday will be closely watched for any signs that U.S. inflation may have peaked. The government will update its Personal Consumption Expenditures Price Index, the Fed’s preferred gauge for tracking inflation. The latest report showed that PCE inflation moderated at an annual rate of 6.3%, although it remained close to the highest level in four decades
U.S. crude oil prices fell for the second week in a row amid growing concerns that rising inflation and interest rates could trigger a recession. Oil was trading around $107 per barrel on Friday, down from more than $120 a couple weeks earlier. The price of copper, an industrial metal, posted an even steeper decline, sinking to a 16-month low.
The views presented are not intended to be relied on as a forecast, research or investment advice and are the opinions of the sources cited and are subject to change based on subsequent developments. They are not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investments.
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