Summary:
Investors have been barraged with data suggesting that inflation is becoming more worrisome and Fed officials are just not going to take it anymore. Reluctantly, the bond market has repriced itself for two 25 basis point rate hikes by yearend and stocks have repriced for greater risk. As a result, the equity market now offers far greater value and upside potential for the balance of the year.
Investors have been barraged with data suggesting that inflation is becoming more worrisome and Fed officials are just not going to take it anymore. Reluctantly, the bond market has repriced itself for two 25 basis point rate hikes by yearend and stocks have repriced for greater risk. As a result, the equity market now offers far greater value and upside potential for the balance of the year.
It remains unclear, of course, whether the Fed will be able to hike just twice before policy is put on pause. But it is clear that housing is softening quite rapidly and this may have some second round effects on consumer activity. Consumers may choose to make additions and alterations to their existing homes if buying a larger or newer home is too expensive, which would greatly limit the depressing.....
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