In the headlines: Last week, the Fed raised target fed funds rate by 75 basis points, marking the fourth consecutive 0.75 percentage point move this year and the sixth increase in the last six months.
This is happening in the context of: Fed Chairman Jerome Powell, in his briefing on the same day, emphasizing that the central bank will continue to battle rising broad price inflation until it returns to its 2% target. On a positive note, October’s consumer price index print was +7.7%, the lowest year-over year (YoY) print since January. For context, CPI numbers were 8.2% in September and a 40-year high of 9.1% in June.
Michael Gapen, Bank of America chief U.S. economist, projected a 50 basis point hike in December, hardly a cause for relief amid a string of consecutive increases.
All in all, Fed’s concerted efforts have brought the federal funds rate to a range of 3.75% to 4%, the highest level since 2008, and up from 0 -0.25% at the beginning of the year.
What it means: Public markets have been extremely volatile this year on the back of the Fed’s hawkish stance.
Between the lines: Amid the broader volatility, investors may be left wondering how to best allocate their capital and remain somewhat insulated from the market turbulence. Several strategies under the private-markets umbrella may be well-positioned to provide that hedge.
1 Bloomberg and Yieldstreet as of 9/30/2022. All correlation coefficients are calculated based on monthly total return data between 3/31/2020 and 9/30/2022. “US Equities” represents the S&P 500 Index. The Yieldstreet Prism Fund’s inception date is March 9, 2020. Past performance is not a guarantee of future returns.
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