It's been a first-half for the record books in 2022 for all the wrong reasons. The S&P 500 Index officially crossed into bear market territory (a 20% decline from its all-time high) on June 13th and bonds are off to their worst start since 1842.
In its effort to combat inflation, the Fed increased rates by 0.75% in mid-June, the largest increase since 1994. Although Fed chairman Jerome Powell had been fond of the term "transitory" when referring to inflation in 2021, persistent high inflation data has led to a more aggressive rate hike than previously anticipated.
Raising interest rates can make an immediate impact on the cost of borrowing and economic activity. But it remains to be seen if this will be enough in the face of other inflationary pressures: war in Ukraine, supply-chain issues, more COVID lockdowns.
Real estate has yet to meaningfully slow, although the rise in mortgage rates should be expected to slow demand. 30-year fixed mortgage rates have increased from 3.29% at the start of the year to over 5.6%.
Podcast: Infinite Loops: Meb Faber - two money managers talk about the importance of writing down your investment plan, the difficulty of buy and hold investing, out-of-favor strategies, and more
Newsletter: James Clear's Weekly 3-2-1 (6/30/2022) - three ideas, two quotes, and one question delivered each week. My favorite segment of this newsletter: "Whether or not something is deemed a 'failure' is dependent on when performance is measured."
