The Fed: From Tragedy to Rebirth?
Just Follow the Path of the Credit Markets
The first half of 2022 has supported the consensus narrative of “tragedy” that has dominated the financial
markets. Indeed, the market pullbacks to start the year have been intense. However, a closer look at the credit markets suggests a changing dynamic. The Fed successfully manipulated the credit markets to create one of the most rapid and aggressive tightening cycles in modern history, despite only making moderate changes to its key interest rate. And now, the credit markets are pivoting. Investors should take note. Should the Fed follow its lead, the anatomy of a correction indicates that we have just exited the second phase of a three-phase process, and the third phase suggests that a rebirth may be upon us.
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Wellington-Altus Market Insights by James Thorne – The Fed – From Tragedy to Rebirth
