Timely and Relevant News: Updates From The Market Pull Back

Markets started to pull back Wednesday, which resulted in the biggest one-day decline for the Nasdaq since last February. Treasuries extended their recent selloff into 2022 with the 10-year yield approaching resistance at the 1.75% level.

Markets rattled when the Fed released their December meeting minutes on Wednesday, which indicated the likelihood of an interest rate hike as soon as March.

You can reference our previous communication, Highlights From The Federal Reserve Meeting. The Fed meets four times a year to update its economic projections for the next several years, as well as its longer-term forecasts.

The Fed's minutes also noted that “some” participants said that it could be appropriate to start balance sheet runoff “relatively soon after beginning to raise the federal funds."

While the asset purchase and rate hike details were largely known, the discussion around balance sheet run-off seemingly surprised markets. Nonetheless, these minutes further confirm that the Fed has likely sped up its intentions to start the removal of monetary accommodation this year.

LPL Financial Fixed Income Strategist Lawrence Gillum has stated, “... the Fed’s job, especially from this point forward, is to prove that it can manage the removal of monetary accommodation without slowing the economic recovery.”

To learn more and ask questions about the markets, we encourage you to join us for our upcoming virtual event, 2022 Market Outlook on Tuesday, January 11th at 4 pm ET.

In the meantime, if you have specific questions related to your own investment strategy or financial planning needs, we welcome you to call us at 302.234.5655 or email us at contactus@covenantwealthstrategies.com to set up time to discuss further. 


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