October 2022

The hope of a Fed pivot, which drove markets higher in July, faded in the latter half of Q3 as the Fed made it clear that they would continue with their aggressive rate hiking campaign until inflation is brought down to a reasonable level. During the quarter, investors saw the Fed hike rates 150 bps, in addition to increasing their interest rate expectations for 2023 by nearly 100 bps (3.75% as of June vs. 4.625% as of September). The result was a rise of 132 bps in the yield of the 2-year treasury, while the yield on the 10-year soared by 81 bps.