• Blog
  • 1 Min Read
  • June 21, 2022

Clearwater Expert Talks Stagflation in The Bond Buyer

Written by:
Alex Strekel

I contributed commentary to a recent article by The Bond Buyer that explores market reaction to the Fed’s recent 0.75% interest rate increase, the highest in decades, and what’s ahead for the U.S. economy.

Journalists Jessica Lerner and Gary Siegel of The Bond Buyer spoke with several experts, including economists and investment managers, in their in-depth analysis of the impact the interest rate hike had on municipal trading. They also explored further expected action from the Fed and the effect that could have on economic growth amid historic inflation.

I commented in the article that the Fed’s action only goes so far when it comes to threats to the economy.

“While the Fed can take action to stabilize the U.S., it cannot as effectively impact these other risks, heightening the probability that stagflation impact will occur even if not expressly coupled with a recession,” I told the publication.

From an investor and manager standpoint, recessions and their timing can be debatable, but the need to identify the risks most susceptible to a decrease in buying power is constant. Identifying risks to the portfolio in terms of country, currency, and sector exposures is critical. 

No asset class is immune to the pressures in such a consumer-driven economy, as well as one that is so inextricably linked to global partners that have been slowing for longer than our recent domestic drop-off. Communication of these risks, and transparency around them can help navigate difficult client conversations and, in many respects, differentiate them.

The full article in The Bond Buyer can be accessed with a subscription here.

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