FNArena’s Weekly Insights – February 14 2022

In this week’s Weekly Insights:

-2022, The Big Adjustment
-February Reporting Season – Predictions & Forecasts
-Conviction Calls
-FNArena Talks

By Rudi Filapek-Vandyck, Editor FNArena

2022, The Big Adjustment

Twenty-seven years ago, almost on the dot, the US Federal Reserve, under heavy political pressure, started lifting interest rates and instantly changed market sentiment and the direction for equity indices.

The shift was quite controversial at the time as it had not been communicated properly; there was no run-away inflation, the Fed was pre-empting what could potentially be on the horizon, and bond markets had had no time to prepare.

1994 marks the last real inflation scare for US financial markets. Up until this year.

There are plenty of differences in context between then and now, but the key common characteristics are:

1. a sudden shift in monetary policy at the US Fed
2. a bond market that needs to adjust

Back then, between February 1994 and February 1995 the federal funds rate went from 3% to 6% and the 30-year bond rate shifted to 8.2% at its peak in November from 5.8% early in the year.

And US equities? ………

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