Don’t Fight the Fed

The FOMC minutes from the April meeting had an unmistakable hawkish tone. Not only was a rate hike discussed in April, but members indicated their concern that the market was vastly underestimating the chance of a rate hike in June. Holbrook has been pounding the table, given the labor market strength and the recent uptick in wages, as well as incipient inflationary pressures, that the Fed could tighten in June, and will very likely move at least three times in 2016. If there is one piece of investment advice that has rung true over the years, it is “Don’t Fight the Fed.” The market continues to doubt the credibility of the Fed, and more importantly, it doubts the credibility of the underlying economic data.