Kovitz Newsletter 2Q24
MARKET INSIGHTS
Over the past two years, the Federal Reserve (“the Fed”) and other policymakers have been navigating a similar, but vastly more complex, problem of pruning back the economy just enough to curtail inflation while both avoiding a recession and planting the seeds for new economic growth in the future. In the popular and financial press, this delicate balancing act is often referred to as the Fed’s attempt to engineer a “soft landing” for the economy.
CORE EQUITY COMMENTARY
Hotter than expected inflationary readings rattled stocks in April and sent bond yields to their highest levels since November of last year. Lingering inflation has been the main issue troubling investors as many came into 2024 betting on as many as a half-dozen rate cuts, only to rapidly scale back those bets when the Consumer Price Index (CPI) repeatedly topped expectations.
FIXED INCOME COMMENTARY
The end of the second quarter brought further evidence of a “Goldilocks” scenario unfolding for the Federal Reserve (the “Fed”) with growth moderating and inflation slowing. This scenario holds the potential to provide broader market support, as it creates room for the Fed to cut policy rates. However, both the timing and pace of Fed rate cuts remain contentious for investors.