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Markets and Economic Update for July 2022: Inflation Persists As Growth Begins to Slow

David Lundgren, CFA®
July 8, 2022

Each month, senior leaders of Hancock Whitney's Asset Management team discuss the latest news and events that impact markets and the economy.

This month: Economic growth is clearly slowing while inflation continues to disrupt. However, expected future inflation measures offer some optimism.

 

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Key Takeaways:

  • The June 10 release of the May Consumer Price Index (CPI) dashed hopes for continuing signs of peaking inflation. The headline 1.0% M/M increase in the May CPI producing an 8.6% Y/Y gain in the June 10 report jolted markets and forced the Fed to reassess its well-publicized path delivering on June 15 an extraordinarily large increase, (0.75%), in the Fed Funds rate.
  • The bond markets suffered through another quarter of historic negative returns as central banks around the world rolled back COVID-era stimulus programs and battled to reign in soaring inflation. Interest rates on government as well as corporate debt securities spiked to levels not seen in years.
  • Another very difficult month and quarter for stocks. The start to 2022 is the worst start to a calendar year since 1970 for the S&P 500 down 20% through June 30. Investors remain concerned over the inflationary impact on both consumers and businesses and the possible impact to both profit margins and future earnings growth.
  • Policy and political related issues continue to contribute to volatility experienced in markets.
    • The Russia / Ukraine situation continues to pressure energy prices as supply chain issues linger. The West is struggling to find appropriate solutions as inflation continues to plague the consumer.
    • Democrats continue to pursue passing parts of the failed Build Back Better legislation. As the midterms get closer, the passage of any major legislative items becomes less likely.

The Hancock Whitney Asset Management team is ready to help guide your portfolio through the ongoing market uncertainty. Let our expert team help you achieve your investment goals.

 

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