Sightline in the Financial Post: Predicting the Next Interest Rate Pivot

As economic uncertainty continues to mount, investors have increasingly been trying to predict the U.S. Federal Reserve’s next move. However, while there are plenty of comments from central bankers to take at face value or dissect for subtle meanings, there is no crystal ball to proclaim the Fed’s next interest rate pivot.

As a result, investors are now divided between optimists, who believe a switch to lower rates is imminent, and realists, who stand by Fed chair Jerome Powell’s comments that there will be no pause in hikes until inflation lowers to the 2 percent target. Where do experienced investment advisors stand on this debate? The Financial Post spike with Sightline Management to find out.

“We’re inclined to take [Powell] at his word, and that he’s not resigned to accept any higher inflation number,” says Paul de Sousa, senior investment advisor with Sightline Wealth Management. He believes that Powell is erring on the side of caution, being more likely to raise rates too high as opposed to not enough, in hopes to finally tame inflation.

However, a higher rate warpath is no simple decision for the Fed. Raising rates too high would likely cause dire economic circumstances that could include a deep recession, a wave of high-profile bankruptcies or catastrophic unemployment numbers. “At that point, a rate cut would be an easy choice,” de Sousa explains. “A deep recession will typically do the Fed’s work quickly, curbing wages, crushing consumer demand and producing deflationary pressure.”

While predicting the trajectory of when the Fed will finally pause rate hikes may be impossible, incorporating a fixed income laddering strategy can help ensure investors get some benefit from the current interest rate environment, regardless of which direction it is headed.

Click here to read the entire Financial Post article.

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Sightline Wealth Management LP is a wholly owned subsidiary of Ninepoint Financial Group Inc. (“NFG Inc.”). NFG Inc. is also the parent company of Ninepoint Partners LP, it is an investment fund manager and advisor and exempt market dealer. By virtue of the same parent company, Sightline is affiliated with Ninepoint Partners LP. Information and/or materials contained herein is for information purposes only and does not constitute an offer to sell or solicitation to purchase securities of any issuer or any portfolio managed by Sightline Wealth Management or Ninepoint Partners, including Ninepoint managed funds. 

 Sightline Wealth Management (“Sightline”) makes every effort to ensure that the information has been derived from sources believed to be reliable and accurate. However, Sightline assumes no responsibility for any losses or damages, whether direct or indirect, which arise out of the use of this information. Sightline is not under any obligation to update or keep current the information contained herein. The information should not be regarded by recipients as a substitute for the exercise of their own judgment. Past performance is not indicative of future performance. Please speak to your Advisor regarding the suitability of information provided in this article for you. The opinions, estimates, projections and/or recommendations contained in this document are those of the author as of the date hereof.

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