Keel Point Insights

Check out our guides, tools and research for expert help on all your
life planning, wealth planning, and familiy management questions!

Articles
& Videos

Awards &
Press Releases

Investment
Bulletins

Keel Point
in the News

Market Recap – November 7, 2022

Robin Freese
November 7, 2022
Market Recap

The Fed raised its Fed Funds rate another 75 bp this past week and said that while it will continue raising rates most likely at a slower pace the upper limit reported in its “dot plot” at its September meeting may be too low. Financial markets reacted negatively.

  • There was no surprise in the 75 bp rate increase announced last week or that the pace of rate increases would slow as the Fed assesses the impact of higher rates and quantitative tightening. The expectation, hence, is for a 50bp increase in December and another 25bp in January.
  • The big surprise was Chair Powell’s mention that the upper limit for the Fed Funds rate likely has moved beyond 4.5% – 4.75% suggested in the September 2020 Summary of Economic Projections, and that it could rise to 5% – 5.25%.
  • The question is how much Fed officials may be underestimating the impact of their rate hikes this year on reducing inflation and slowing economic growth. The consensus is that inflation will decelerate more quickly than the Fed is expecting and that by the end of January 2023 core PCE inflation will be below the 4.75% threshold that would otherwise trigger additional rate increases.
  • Between now and the January 2023 FOMC meeting, CPI and Personal Consumption Expenditures inflation data will be available for October, November and December, along with November and December employment data and other indicators of slowing U.S. economic growth. Each data release will trigger market reactions about whether the slowing of inflation and growth are on track to be meeting the Fed’s targets.

Mid-term elections are looking more likely to result in at least one body of Congress to change hands making it more difficult, if not impossible, for President Biden and Democrats to raise taxes or expand social spending programs.

  • The biggest risk for the economy and financial markets from a divided Congress is the machinations around extending the Debt Limit next fall.

Disclosure: Securities offered through Keel Point Capital, LLC, Member FINRA and SPIC. Brokerage and Investment advisory Services are offered under the Keel Point brand. Investment Advisory services offered by Keel Point, LLC an affiliate of Keel Point Capital, LLC. While reasonable efforts have been made to provide data from sources considered to be reliable, no guarantee of accuracy is given. Keel Point does not give tax, accounting, regulatory, or legal advice to its clients.

Related News & Articles

Market Recap – November 21, 2022

This past week highlighted the ongoing struggle between the positive forces of lower inflation and Fed officials trying to prevent an outbreak of “irrational exuberance” in financial markets. October CPI and PPI (Producer Price Index) inflation are lower on a monthly,...

read more

Market Recap – November 14, 2022

The most important news last week was the better-than-expected October CPI inflation report which spurred financial markets to rally on the belief that the Fed can ease back on the pace and ultimate level of interest rate increases. With the Fed already having...

read more

Market Recap – October 31, 2022

Until the disinflationary data show up in official figures, the Fed will continue hiking interest rates with another 75 bp increase in November, bringing the Fed funds target to 3.75% to 4.00%. The inflation data are not good enough to warrant easing interest rate...

read more