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After a tough December, the markets rallied in January. Fears about inflation faded, and hopes that the Fed would hike rates more slowly—or even start cutting them—dominated markets as signs of economic weakness appeared. But this bad economic news was good news, as long-term rates pulled back, supporting financial markets.
Let’s start with inflation, specifically, the Producer Price Index (PPI) inflation figures and the University of Michigan inflation expectations, both of which came out this morning. The details don’t really matter—what matters is the big picture. The PPI dropped significantly on a year-over-year basis but came in high on a month-to-month basis. Similarly, the Michigan inflation expectations number dropped significantly for the next year but remained unchanged for the next five. So, is this good news or bad news?
To view the 2022 Client Appreciation Webinar, Hosted by Capital Group; please click on the link below.
Stern & Heatwole's 2022 Client Appreciation Webinar
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