The big question is how high will the Fed raise interest rates? If we compare key rates
like consumer price inflation, Federal Funds rate and the US 10-year Treasury Bond
yield, it is obvious that rates could go much higher.
If the Fed actually followed the data, as they say they do, Federal Funds rates would
already be well above zero based on the much higher rate of consumer inflation. That is
not what is happening. There are strong political pressures at work here: Washington
wants to avoid both inflation and recession. Our view is that these are mutually exclusive
options given the supply chain constraints, residual Covid restrictions, and change in
Robert Lloyd, CFA®
Chief Investment Officer
Lloyds Intrepid Wealth Management
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