3Q, 2022 Commentary: Whac-A-Mole

Summary

• In the first half of the quarter, stocks and bonds rallied on the hopes of a Fed policy pivot, but a sharp reversal in the second half brought new highs for bond yields and new lows in stocks for the year.
• Investors reacted especially negatively to Federal Reserve Chair Jerome Powell’s August speech at the annual Jackson Hole Economic Symposium where he communicated the Fed’s resolve to whack inflation back to levels consistent with its stable price mandate.
• The Fed’s strong and explicit rhetoric throughout the quarter reinforced its continued obsession with lowering inflation, even at the expense of the broader economy and asset prices.
• At the end of September, the UK’s proposed economic package triggered turmoil in its markets, ultimately resulting in a rapid pivot by the Bank of England.

Read and download the commentary here.