So you have three big buyers that are no longer there. And my message to investors is that the market is not done, because for several reasons on the 10-year Treasury with market interest rates rising.įirst and foremost, if you just look at the technical chart on the 10-year Treasury given where we were from the low in March to the high most recently, it does appear that 475 to 5% is in play on a technical basis.īut secondly on a fundamental basis, you no longer have, if you will, the size buying that we've seen from the Japanese, from the Chinese, and certainly from the Federal Reserve now that we're fully engaged in a quantitative tightening standpoint. Thank you for bringing that up because the market discourse now is the Fed's done or close to done. What do you think is going to drive that next leg up from where we already are? And certainly, as we look at some of the signals, I mean, looking at the 10-year Treasury, I mean, you expect another 50 basis point increase likely in the coming weeks or months. So there will be some crosscurrents that investors need to deal with regarding inflation over the next few months. So even though inflation is steady in that analysis, at 2/10 of 1%, the year over year number would be 4%, which would suggest inflation is accelerating. Even if we just maintained a July pace of 2/10 of 1%, by year end, we will still have a print of 4% year over year. But November still in play.īut I do think investors need to appreciate that the year over year comparisons on inflation is something that I don't think has really been fully embraced. I think a hike next week is pretty much off the table. But really beyond this number, the Fed meets next week, right? So there'll be a lot of concern. So I think that's something that maybe the market hasn't really appreciated yet. And now we're looking at 6/10 of 1% for the month of August. And I think that's kind of factored into the markets.īut on the consumer price, the estimate, the consensus estimate is up significantly from prior month's data, we had 2/10 of 1% in July. The wholesale prices have come down considerably. I think the CPI report will be more important than the wholesale or the PPI measure coming out on Thursday. ![]() Given what we're seeing with PPI and CPI data that's been pretty stubbornly strong here, what should investors make of this? So John, for investors trying to make sense of what to do basically in this holding period before we actually hear word from the Fed. ![]() Thank you so much for joining us this morning. ![]() So how can we expect the news to impact markets? Well, joining us now is John Lynch, Comerica Wealth Management CIO. Consumer and producer prices cross this Wednesday and Thursday respectively, giving the last insight into inflation ahead of next week's Fed meeting. Lynch notes how investors should position their portfolios on various Fed forecasts. "The market discourse now is the Fed's done or close to done, and my message to investors is that the market is not done because for several reasons on the 10-year Treasury with market interest rates rising," Lynch explains. Comerica Wealth Management Chief Investment Officer John Lynch shares his thoughts on the Fed's path for interest rates based on inflation trends, forecasting a 50 basis point hike in the coming months, as well as what markets are expecting. August's Consumer Price Index (CPI) print comes out this Wednesday, ahead of the Fed's September meeting next week.
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