Among the many concerns expressed in our initial Outlook 2022 publication, inflation has overwritten most of them. So too has the Federal Reserve’s response to it. While we did not think the risk associated with prices running at the highest in four decades would overwhelm consumer behavior so much as to thwart the economic expansion, it has clearly stunted activity.


  • The underlying fundamentals of the U.S. economy remain healthy enough to overcome the friction associated with high inflation.
  • With an estimated $2 trillion-plus in incremental savings, consumption should remain supportive of future economic activity.
  • U.S. equities should regain their footing, although slipping earnings growth because of margin pressures could weigh on prices.
  • Geopolitical risks remain: Russia, China/Taiwan sovereignty, Iran nuclearization, cyber-attack—any of these could emerge as a country-specific or regional existential threat.
  • Interest rates are higher in nearly every developed market around the world, and risk-taking sentiment has been consistently poor, leading credit-sensitive assets to underperform.
  • Long-term interest rates are likely to decline, as the fixed income markets price in the probability of economic slowing and future Fed rate cuts.
  • Healthy balance sheets across much of the investment-grade and high-yield corporate world continue to offer fundamental protection against a deteriorating economic climate.
  • Two areas of fixed income experienced notable spread widening and now appear attractively valued: Preferred securities and tax-exempt municipal bonds.

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About the authors

Guy LeBas

Director, Custom Fixed Income Solutions

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Mark Luschini

Chief Investment Strategist, President and Chief Investment Officer, Janney Capital Management

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