In Q4, uncertainty has a name: Fed policy. As monetary policy becomes increasingly data dependent, market volatility around inflation and jobs data could get more acute. Economic growth is already struggling for a foothold as this business cycle traces a unique trajectory. In the final months of 2022, we look at how investors can position portfolios against a macro backdrop that has pummeled traditional assets.
- The Fed has surprised markets by moving faster and higher than expected. We anticipate uncertainty around peak hawkishness to continue to rock markets in Q4.
- Inflation is at the epicenter of this uncertainty. While select relief may be in sight in some sectors, we expect the year-over-year inflation to remain elevated in Q4 and into 2023.
- In addition, geopolitics, the strong dollar and global growth headwinds may be unlikely to offer a catalyst for much recovery in traditional assets after a brutal first three quarters.