Hoisington Management’s fourth quarter 2022 Review and Outlook is now available to the public on its website here. As always, a concise master class on monetary impacts and the economic cycle, see A Theory of Interest Rate Cycles. The bottom line: growth bearish and investment grade bond bullish:
Poor consumer spending over the critical Christmas shopping period, slumping exports, sharp deterioration in residential construction, and contracting diffusion indices in both the manufacturing and service sectors will result in business conditions in the first quarter that should be dramatically weaker than the fourth quarter. The risks of recession will become much clearer as 2023 progresses. Headline inflation will recede further from the 1.9% pace in the CPI of the latest six months. These developments are aligned with interest rate cycle theory as well as the case for lower U.S. Treasury bond yields.
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