We read lots of research, both on and off Wall Street. One of the best and most interesting writers about bonds, interest rates and Fed policy is Lacy Hunt at Hoisington Investment Management Company. For years he correctly forecast lower rates and moderate inflation, providing soothing words when CPI would rise and the Fed talked tough. The Hoisington message is changing:
"These and many other harbingers of recession constitute a favorable environment for long-term bond investors. However, should the Federal Reserve cease in their efforts to calm inflation before it has been fully restrained, bond investors should be wary."
I don't know which is a worse situation for the economy: runaway inflation that the Fed can't control, or a Fed that is uninterested in controlling it.
Here is the full note. It is worth a read.
Robert Lloyd, CFA®
Chief Investment Officer
Lloyds Intrepid Wealth Management
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