Sep 28, 2022
(9/28/22) We have long held that market instability would be a
key driver in a Fed policy shift from its current course of
fighting inflation with higher rates. The Bank of England today is
moving from quantitative tightening and starting to buy bonds
because of "Market instability." A credit crisis causes much more
long-term damage to an economy than does inflation, and any such
crisis will dramatically reduce inflation, fast. And the Fed's big
risk at this point is destabilizing markets with higher interest
rates. Credit spreads are beginning to rise, with yields on the
10-yr treasuries rising above three standard deviations from their
50-DMA, adding stress to markets, and the first whiff of trouble
appears to be coming from the housing markets as mortgage rates
rise. The volatility index is also starting to show some signs of
life. The question now is, is the Bank of England now a proxy for
more central bank changes to come?
Hosted by RIA Advisors' Chief Investment Strategist, Lance Roberts,
CIO
Produced by Brent Clanton
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