The market and economy face several unique and challenging threats as we enter the second half of the year.
The market’s primary concern is now recession rather than inflation. This is evident by longer-term rates turning lower and recent weakness in commodity prices. We also see this shift reflected in the Fed funds futures market which now shows the expectation of 3 rate cuts in the first half of 2023 whereas 6 weeks ago, the market was looking for 3 rate hikes in the first half of 2023.
