◀️ Rising Inflation & Interest Rates: Reverse Wealth Effect
◀️ Rising Inflation And Interest Rates Are Creating A Reverse Wealth Effect
The latest inflation numbers confirm that the prices of everyday goods and services are still rising despite Fed rate hikes and a slowing economy. Major stock market indices continue to be in or near bear market levels, with the S&P 500 down 25% year-to-date, while interest rates jumped further last week, with the 10-year Treasury yield rising above 4%. Whether the Fed can regain control of inflation while keeping the economy steady remains the central question for investors and economists. Since inflation data is only released monthly, GDP data quarterly, and the Fed only meets once every six weeks, it could be some time before this question is fully answered.
We discuss in this episode of The Wealth Effect Podcast:
🏦 Historical Interest Rate Cycles
📉 The Yield Curve & Leading Economic Indicators
🏠 Mortgage Rates and Residential Real Estate
Matt Faubion, CFP®
Founder - Wealth Manager
Show notes and charts:
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The bottom line: Investors should continue to expect Fed rate hikes in response to inflation, putting downward pressure on the economy in general and the residential real estate market in particular. Further, we do not see a "Fed Pivot" in the near term as we have yet to see meaningful improvement in core inflation.
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