Halyard’s Weekly Wrap – 06/17/22
As we wrote last week, the May inflation report and the University of Michigan consumer sentiment surveys were worrisome indicators. So much so that on Monday the Fed leaked news to the media that they were going to raise rates 75 basis points at the coming meeting, instead of the 50 they’ve signaled since the May meeting. Chairman Powell admitted as much at the post-FOMC press conference. In addition to that hawkish turn, the committee further communicated that they expect the overnight rate to end 2022 at 3.4% and end 2023 at 3.8%. Moreover, to drive home his transformation from Trump lapdog to Volker incarnate, he later said that his commitment to reining in inflation was “unconditional.” Presumably, that means that he doesn’t care how the equity market reacts. We’re not fully convinced of that commitment, but time will tell.