End of the Line?
This week, the Federal Reserve took decisive action, raising interest rates in what many believe could be their final act, with only a possibility of one more rate hike in the future. The significance of this move cannot be understated. The Federal Reserve's benchmark interest rate is now at its highest since 2000, marking a substantial milestone in the current economic landscape. Moreover, this rate increase has also set a record for the most aggressive pace of hikes since the wild days of the 1980s.
As a result of their assertive rate hiking policy, we are witnessing encouraging developments in the economy. Inflation, was once a cause for concern, is now showing signs of cooling off, bringing much-needed relief to the markets. Furthermore, the labor market has displayed remarkable resilience, standing strong in the face of the Fed's bold actions, instilling confidence among investors. With these positive outcomes, the Fed is in a celebratory mood, making a bold statement that a recession is no longer on the horizon.
While we acknowledge the Fed's optimism, it is essential to remain cautious and mindful of history. Past experience has taught us that such aggressive rate hikes can sometimes precede a recession. We understand the significance of a disciplined investment process. Our RiskFirst® approach aims to guide our clients strategically through market ups and downs, helping them navigate uncertain times.
So, as we appreciate the current economic landscape, let's also stay vigilant and prepared for whatever the future holds.
End of the Line?
Source: Bloomberg, Redwood. Data as of 7/28/2023. Date Range from 3/31/1971 – 7/28/2023.
Regards,
Allgood Financial
Disclosure: This piece is for informational purposes only and contains opinions of Redwood that should not be construed as facts. Information provided herein from third parties is obtained from sources believed to be reliable, but no reservation or warranty is made as to its accuracy or completeness. Charts and graphs are for illustrative purposes only. Discussion of any specific strategy is not intended as a guarantee of profit or loss. Specific securities mentioned are not recommendations to buy or sell. Past performance is not a guarantee of future results. Objectives mentioned are not guaranteed to be achieved. Investors cannot invest directly in any of the indices mentioned above. RiskFirst® is a registered trademark of Redwood Investment Management, LLC.
