Bassanese Bites: Should we wait? – November 21 2022
Week in review
With the tailwind of a good recent US CPI result, global equities tried hard to continue the rally last week – but ended down in the face of the unrelenting headwind of hawkish Fed commentary. Most Fed officials who spoke last week conceded the US central bank would likely raise rates by ‘only’ 0.5% next month – following multiple 0.75% rate increases – but that the peak Fed funds rate next year is still likely to be around 5%. And rates could go higher still if the economy continues to display as much resilience to rate hikes as it has done to date. One way or another, Fed officials still seem to think the US economy needs to slow and the unemployment rate needs to rise – whether that reality is fully priced into the stock market is far from clear. Indeed, oil prices slumped 10% last week on fears of slowing global economic growth.
