Wilmington Trust is a registered service mark used in connection with various fiduciary and non-fiduciary services offered by certain subsidiaries of M&T Bank Corporation including, but not limited to, Manufacturers & Traders Trust Company (M&T Bank), Wilmington Trust Company (WTC) operating in Delaware only, Wilmington Trust, N.A. (WTNA), Wilmington Trust Investment Advisors, Inc. (WTIA), Wilmington Funds Management Corporation (WFMC), Wilmington Trust Asset Management, LLC (WTAM), and Wilmington Trust Investment Management, LLC (WTIM). Such services include trustee, custodial, agency, investment management, and other services. International corporate and institutional services are offered through M&T Bank Corporation’s international subsidiaries. Loans, credit cards, retail and business deposits, and other business and personal banking services and products are offered by M&T Bank. Member, FDIC.

M&T Bank Corporation’s European subsidiaries (Wilmington Trust (UK) Limited, Wilmington Trust (London) Limited, Wilmington Trust SP Services (London) Limited, Wilmington Trust SP Services (Dublin) Limited, Wilmington Trust SP Services (Frankfurt) GmbH and Wilmington Trust SAS) provide international corporate and institutional services.

WTIA, WFMC, WTAM, and WTIM are investment advisors registered with the U.S. Securities and Exchange Commission (SEC). Registration with the SEC does not imply any level of skill or training. Additional Information about WTIA, WFMC, WTAM, and WTIM is also available on the SEC's website at adviserinfo.sec.gov.

Private Banking is the marketing name for an offering of M&T Bank deposit and loan products and services.

M&T Bank

Equal Housing Lender. Bank NMLS #381076. Member FDIC.

Investment and Insurance Products • Are NOT Deposits • Are NOT FDIC Insured • Are NOT Insured By Any Federal Government Agency • Have NO Bank Guarantee • May Go Down In Value

Investing involves risks and you may incur a profit or a loss. Past performance cannot guarantee future results. This material is provided for informational purposes only and is not intended as an offer or solicitation for the sale of any security or service. It is not designed or intended to provide financial, tax, legal, accounting, or other professional advice since such advice always requires consideration of individual circumstances. There is no assurance that any investment, financial or estate planning strategy will be successful.

Investment Management

Inflation Not Going Quietly - March 2023

Tony Roth
Chief Investment Officer

March 7, 2023

Tags

Recent weeks have introduced significant questions as to whether the latest inflation outlook warrants recent optimism. Revisions to 2022 inflation data and hotter-than-expected releases to start the year have accompanied a blockbuster payroll report for January and strong consumer spending data. These data have many now contemplating a “no landing” scenario (in other words, not only avoidance of a recession in 2023 or early 2024, but continued strength in the economy). We do not share this optimism. In our view, persistently hot inflation and economic data will lead to higher rates than markets currently forecast. In turn, this may increase the chance of recession, albeit over an extended timeframe than first expected.

The Fed’s conundrum

February produced several key inflation updates that together form a more challenging backdrop for the Fed than was understood in January. On February 10, the Bureau of Labor Statistics updated its seasonal adjustments for the Consumer Price Index (CPI), resulting in upward revisions to core CPI (excluding the volatile food and energy prices) in the second half of 2022. Then January’s Producer Price Index (PPI), CPI, and Personal Consumption Expenditures Index (PCE) inflation all moved higher from the prior month, signaling that inflation could prove stickier. Markets have repriced expectations for the fed funds rate—in particular, raising the peak rate to 5.4% and removing any expectation for rate cuts in 2023—and markets have cooled. Stubborn inflation due to supply-side forces is central to our 2023 Capital Markets Forecast.

Download Article

WTU Newsletter Card

WTU Newsletter Handler