What’s the Fed’s Master Plan?

Wall Street is always searching for a hero to embrace or a villain to blame. And right now, Fed Chair Jerome Powell is the villain.

After the September Fed meeting, Powell said interest rates may be heading higher for longer than anticipated and that “no one knows whether this process will lead to a recession, or if so, how significant that recession will be.”

But a closer look at available data suggests a different story.

In the chart below, we see that traders expect short-term rates to peak next year and perhaps trend lower by the end of 2023, which could mean that Wall Street is prepared to see its “villain” as a “hero” when the Fed tames inflation.

We know this year has had its ups and downs. Just when it appears to have turned a corner, something else happens, and the markets are under pressure again.

But I’m optimistic that the Fed has a plan, and I’m looking forward to the day when Fed Chair Powell has good news to share.

^{The views and opinions expressed herein are those of the author(s) noted and may or may not represent the views of Lincoln Investment. The material presented is provided for informational purposes only. Nothing contained herein should be construed as a recommendation to buy or sell any securities. As with all investments, past performance is no guarantee of future results. No person or system can predict the market. All investments are subject to risk, including the risk of principal loss.}