Rising Inflation Should Dissipate

In their latest commentary, the Cetera Investment Management Team discusses the recent inflation report. The financial markets expect the Federal Reserve to raise rates to the 1.75% to 2.0% range (equivalent of six to seven 25 bps rate hikes) to combat inflation this year. We feel that may be too aggressive as the catalysts behind the jump in inflation (recovering demand and supply constraints) start to subside later this year.  

Record 4th quarter inventories, along with news from officials at the Port of Los Angeles recently announcing that they expect cargo normalization by the end of 2022 could reverse some of the decade high inflation on goods.  As the second phase of the economic recovery begins we are looking for consumers to focus less on accumulating goods and more on traveling, services, and experiences as they are free to move about after Covid-19 restrictions are slowly lifted. 

As always, please reach out to the office if you have any questions.