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Almost halfway through 2022, we’ve seen significant losses in both stocks and bonds. As of May 13th, global stocks were down 16% and global bonds were down 12%. Higher interest rates, the war in Ukraine, and persistent inflation have left very few asset classes safe from the sell-off, and while bonds typically provide stability when equities are down, a benchmark 60/40 stock-bond portfolio is down over 14% year-to-date.

The Fed’s challenge to administer the correct dosage of interest rate increases to slow down inflation has proven to be a tough pill to swallow.

While some portions of the current inflationary spike may be temporary, the large increase in money supply, imbalances in supply and demand, and longer-term demographic trends suggest that a longer cycle of higher-than-normal inflationary pressures may have arrived upon our shores.