Fed officials will have been eyeing the flood of red on their screens this week with a growing sense of foreboding. Admittedly, for GDP growth to slow and inflation to fall, they want financial conditions to tighten, which includes lower equity prices, a stronger dollar and higher credit spreads. But they also want those adjustments in markets to be orderly and proportionate. With the S&P 500 down almost 19% since the start of the year, including 8% in the past week alone, what started out as an orderly repricing, in response to the Fed’s monetary tightening, is at risk of becoming a disorderly rout.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services