Market Commentary | December 13, 2022
Is inflation dead?
This morning the Labor Department reported November’s month-over-month core inflation of just 0.1%, far below the forecast rate of 0.4% and, annualized, below the Fed’s 2.0% target rate. The Fed is expected to hike rates by an additional 50 basis points on December 14th, but the market is already anticipating that the rate increases will soon come to an end; the 10-year Treasury yield has continued its decline from 4.22% in early November to 3.50% today. Yield is going to become scarcer.
Throughout November and into December we have worked to take advantage of anxiety-generated market price dislocations and secured higher dividend flows through the purchase of discounted common and preferred REIT shares across various sectors. We have locked in high yields so that when rates stop rising our portfolios will cashflow at nearly twice the 10-year Treasury rate. If/when rates begin to decline, we can anticipate attendant capital appreciation.
We wish you Happy Holidays and look forward to working with you in the new year.
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