Inflation has been falling gradually, but the conclusion for markets remains the same: We are still above the Federal Reserve’s 2% inflation target. So, we should expect higher rates for longer. Fed fund futures are currently pricing that interest rates will stay elevated until July 2024. According to the Bloomberg US BMA6040 Index, 60/40 portfolio value is down 5% over the last two months. In an environment of high rates and slowing earnings—which is needed to get inflation under control—the outlook for the 60/40 portfolio remains negative.
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