Is inflation peaking? | Independent Verde
You see it in the prices at the grocery store and at the gas station. You feel it in your monthly budget. So why don’t the financial markets seem overly concerned about inflation?
Remember that financial markets are considered “discount mechanisms,” which means they look six to nine months into the future. And by June 2022, financial markets expect inflation to drop from today. (1)
A lesser-known indicator that helps support this forecast is called the Baltic Dry Index. It measures the cost of transporting raw materials, such as coal and steel. The index has been trending downward for several weeks, which has suggested in the past that prices may be more manageable in the coming months. (2)
No indicator is foolproof. That’s why the Baltic Dry Index is just one of many indicators our professionals follow when monitoring inflation. They are also keeping a close eye on the Fed, which is responsible for controlling inflation. (3)
As the economy improves, the Federal Reserve has indicated it will cut back on bond purchases this month. It can help with inflation. The Fed has also prepared the markets for higher interest rates in 2022. That too can help. (4)
For now, it’s important to understand that inflation can influence interest rates, which often play a role in building a portfolio. We have a strong focus on the future of inflation to determine if portfolio changes are appropriate going forward.
Dawna Westberg-Welch can be reached at 928-325-0271 or [email protected]
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenter or its affiliates. This information comes from sources believed to be accurate. Please note that investing involves risk and past performance is no guarantee of future results. The publisher is not engaged in the provision of legal, accounting or other professional services. If assistance is required, the reader is advised to seek the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding a federal tax penalty. This is neither a solicitation nor a recommendation to buy or sell any investment or insurance product or service, and should not be construed as such. Not all indices are managed and do not illustrate any particular investment. Investing involves risk and investment decisions should be based on your own goals, time horizon and tolerance for risk. The return and principal value of investments fluctuate with changing market conditions. When sold, investments may be worth more or less than their original cost. Forecasts or forward-looking statements are based on assumptions, subject to revision without notice, and may not materialize. “Securities offered via LPL Financial, member of FINRA / SIPC. Investment advice provided by Stratos Wealth Partners, Ltd., a registered investment adviser and a separate entity from LPL Financial. Quotes: 1. Investopedia.com, 2021 2. CNBC.com, November 10, 2021 3. ClevelandFed.org, 2021 4. CNBC.com, November 3, 2021