Market Commentary — June 13, 2022

The market was hoping for some sign that inflation was abating, but instead, the May CPI number of 8.6% came in hotter than expected, even higher than April’s 8.3% reading. Core CPI, ex-food, and energy climbed 6% which was also higher than estimated. Going into the week, the Fed was expected to raise interest rates by half a point (50 bps), but after Friday’s hot number, some are now pricing in a three-quarter point (75 bps) hike.

One interesting consumer data point during the week was retailer Target guiding down profits for the second time in three weeks as it struggles to keep up with a sudden shift in demand away from home goods and electronics into categories such as beauty, grocery, and apparel.

I had the pleasure of meeting up with my old colleague Kristina Hooper, now the Chief Global Market Strategist for Invesco. She suggests higher rates and inflation is not causing demand destruction but rather “demand delays and demand discretion.” Unlike other past inflationary periods, consumers believe that prices will not remain elevated for long. While consumers appear willing to hold off on some physical purchases, service segments like travel and dining remain strong.

We question the Fed’s ability to tame inflation by raising interest rates or trimming their balance sheet without spurring a recession, but still, hold out some hope for a “softish” landing. Maybe we won’t avoid a recession entirely, but given the underlying strength of the economy, perhaps it will be short-lived.

In ETF news, another firm is being investigated for alleged “greenwashing” – this time Goldman Sachs. Flows into government bond ETFs surged to a record high in May, as investors pivot to low-risk assets. Also benefiting from the “flight to quality” is a value relative to growth on the equity side, although during Friday’s sell-off not much was spared. Gold ETFs experienced their third month of inflows, with AUM rising 10% through May.

Jane Edmondson
CEO and Co-Founder

Share this Market Commentary


EQM Indexes LLC is a woman-owned firm dedicated to creating and supporting innovative indexes that track growth industries and emerging investment themes. Co-founded by Jane Edmondson, a former Institutional Portfolio Manager with more than 25 years in the investment industry.


The information provided on this page is for illustrative purposes only and is not intended to serve as investment advice. The information provided is as of particular time and subject to change at any time without notice.

It is not possible to invest directly in an index. Exposure to an asset class represented by an index is available through investable instruments based on that index. EQM Indexes does not sponsor, endorse, sell, promote or manage any investment fund or other investment vehicle that is offered by third parties and that seeks to provide an investment return based on the performance of any index. EQM Indexes Indices makes no assurance that investment products based on the Index will accurately track index performance or provide positive investment returns. EQM Indexes is not an investment advisor, and makes no representation regarding the advisability of investing in any such investment fund or other investment vehicle. A decision to invest in any such investment fund or other investment vehicle should not be made in reliance on any of the statements set forth in this article. Prospective investors are advised to make an investment in any such fund or other vehicle only after carefully considering the risks associated with investing in such funds, as detailed in an offering memorandum or similar document that is prepared by or on behalf of the issuer of the investment fund or other vehicle. Inclusion of a security within an index is not a recommendation by EQM Indexes to buy, sell, or hold such security, nor is it considered to be investment advice.