Too Hot
Inflation continues to run well above the Fed’s 2% target, and last week’s Consumer Price Index (CPI) release indicated that price pressures are accelerating rather than subsiding (Fig. 1).
Fig. 1: US Consumer Price Index
Source: Bloomberg, Mill Creek. As of February 12, 2025.
Why it matters
At this point, investor optimism for a sustained rate cutting cycle has been completely erased from the market and even Fed Chair Jerome Powell has said that the Fed doesn’t need to rush on rate cuts, which is a big shift in his thinking from just six months ago.
The economy and labor market remain strong, which means we shouldn’t expect rate cuts from the Fed until we see sustained labor market weakness. Until then, we expect higher volatility in equity markets and an upward pressure on bond yields.
Disclosures & Important Information
Any views expressed above represent the opinions of Mill Creek Capital Advisers ("MCCA") and are not intended as a forecast or guarantee of future results. This information is for educational purposes only. It is not intended to provide, and should not be relied upon for, particular investment advice. This publication has been prepared by MCCA. The publication is provided for information purposes only. The information contained in this publication has been obtained from sources that
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