Fed Policy Slowly Starting to Work But Still Long Way to Go

Apollo Chief Economist

The Fed wants to tighten financial conditions to cool down inflation, and investors passively holding the S&P500 and the Investment Grade credit index are so far down 13% and 16% from their peaks, see charts below. The next step is to monitor for any sign of a slowdown in the economic data. The consensus expects the April employment report on Friday to come in at 391K and the unemployment rate to decline to 3.5%, suggesting that the consensus does not yet see any signs of a slowdown in the economy. For more, see our chart book I sent around on Saturday with daily and weekly indicators for the US economy.

Chart showing the S&P500 falling 13% from its January 2022 high as the Fed tightens financial conditions
Source: Bloomberg, Apollo Chief Economist. Note: Bloomberg ticker used for S&P500: SPY.
Chart showing investment grade bonds falling 16% off its high
Source: Bloomberg, Apollo Chief Economist. Note: Bloomberg ticker used for the IG credit index LQD.

This presentation may not be distributed, transmitted or otherwise communicated to others in whole or in part without the express consent of Apollo Global Management, Inc. (together with its subsidiaries, “Apollo”).  

Apollo makes no representation or warranty, expressed or implied, with respect to the accuracy, reasonableness, or completeness of any of the statements made during this presentation, including, but not limited to, statements obtained from third parties. Opinions, estimates and projections constitute the current judgment of the speaker as of the date indicated. They do not necessarily reflect the views and opinions of Apollo and are subject to change at any time without notice. Apollo does not have any responsibility to update this presentation to account for such changes. There can be no assurance that any trends discussed during this presentation will continue.   

Statements made throughout this presentation are not intended to provide, and should not be relied upon for, accounting, legal or tax advice and do not constitute an investment recommendation or investment advice. Investors should make an independent investigation of the information discussed during this presentation, including consulting their tax, legal, accounting or other advisors about such information. Apollo does not act for you and is not responsible for providing you with the protections afforded to its clients. This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any security, product or service, including interest in any investment product or fund or account managed or advised by Apollo. 

Certain statements made throughout this presentation may be “forward-looking” in nature. Due to various risks and uncertainties, actual events or results may differ materially from those reflected or contemplated in such forward-looking information. As such, undue reliance should not be placed on such statements. Forward-looking statements may be identified by the use of terminology including, but not limited to, “may”, “will”, “should”, “expect”, “anticipate”, “target”, “project”, “estimate”, “intend”, “continue” or “believe” or the negatives thereof or other variations thereon or comparable terminology.