The big news this week is the November CPI inflation report tomorrow (December 13) and the Fed’s decision on additional interest rate increases on Wednesday (December 14).
- We expect the November CPI to show a continuing decline in the rate of inflation, particularly in core goods, and some positive signs in services inflation declining as well.
- That said we don’t expect the FOMC to declare victory over inflation, but instead believe Chair Powell will push back on any notion that the slower pace of rate increases reflects any “dovish pivot” in Fed policy.
- The Fed’s quarterly Summary of Economic Projections (“SEP”) release on Wednesday likely will show the higher peak in Fed Funds rates which markets are pricing in. The SEP also may show a higher unemployment rate and lower forecast GDP growth.
The J.P. Morgan 2022 Long-Term Capital Markets Assumptions for asset class annual returns over the next 10-15 years show a notable increase over its 2021 forecast.
Source: J.P. Morgan Asset Management
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