“The issue is that consumers are actually spending at a pace that is faster than their income growth, and have been for the last six or nine months,” said Bob Elliott, co-founder, chief executive officer and chief investment officer of Unlimited Funds, in a phone interview.
The “flood of money” into the bond market in recent weeks “would make a lot of sense if we were very close to a recession,” he said. “But we’re not close to a recession, based upon the labor market and consumer spending behavior.” Stocks and bonds have been battered in 2022 amid anxiety over the Federal Reserve’s decisions to raise interest rates in its battle to tame high inflation in the U.S. The Fed’s rapid pace of rate hikes has stoked fears that it may overtighten its monetary policy and cause a recession, though at least for now, the labor market remains strong.
That’s above the S&P 500’s SPX trading level of around 4,017 on Tuesday afternoon, as investors digested fresh data showing inflation in November was softer than expected, according to FactSet data, at last check.