Private Client Review and Outlook

"September’s Fed decision was going to be a surprise no matter what, a rarity in the Powell era, with cut expectations closely balanced between the 25 and 50bps camps before the meeting. Powell ultimately went with 50..."

"Cyclical change is often clearer after the fact than during the process. Inflation has garnered the lion’s share of economic attention over recent years, the fight against which prompted 11 rate increases from 2022 to 2023..."

"After a spring marked by volatile economic data and a first half of 2024 plagued by uncertainty, July’s “goldilocks” economic data was followed at the end of the month by a surprisingly weak jobs report that raised recession fears and roiled markets...

"Three major themes emerged in June that we believe will be critical over the summer and fall; solidified improvement in inflation, growing evidence of a softening economy, and renewed political risk. We will address all three..."

"In some ways the April PCE inflation report, released in late May, was the inverse of February’s; it met the consensus +0.2% mark, but by the barest possible margin..."

"April may have indeed been the cruelest month for rate sensitive investors, as a third consecutive strong CPI print sent Treasury yields soaring early in the month. The print wasn’t quite as bad as the market reaction indicated..."

"Rather than harbinger of weakness to come, we found the revised employment reports more consistent with the Fed’s projections of a “soft landing...”

"February’s biggest story was a series of unexpectedly hot inflation reports sharply reducing market expectations for 2024 Fed rate cuts. Beneath the surface, the month was a Russian doll of nested contradictions, not the least of which being that while we welcome this repricing (the markets now closely align with our expectations for 2-3 cuts before year-end), fears of a reacceleration of inflation are probably misplaced, and certainly premature..."

"The most important moment of the Federal Reserve meeting on January 31st was Powell’s response to the final question about the risks posed by economic strength. He indicated in no uncertain terms that the Fed was no longer very concerned about strong consumption or growth, since inflation had continued to fall the entire second half of the year despite a fast-growing economy..."

"December brought renewed talk of a Fed “pivot,” and growing expectations for Fed Funds rate cuts met only token resistance from Fed Chairman Jerome Powell."