The first half of 2022 has not been easy for investors as stocks across all major indexes continue to rise and fall quickly and dramatically, leaving many concerned and uncertain about the future of their finances. To help investors better understand this volatility, CNBC spoke with Axonic Capital Director of Research Peter Cecchini for insight.
According to Cecchini, the key to this volatility was the U.S. Federal Reserve rejecting the characterization of current inflation levels as transitory. “I think that changed the tenor of markets, or at least it should have,” he explains. “I think this is a sell-to-rally market and I think the Fed is going to have to act. The only thing that will stop the Fed from acting is if the equity markets and other risk asset markets do some of the tightening for it.”
While it is clear that the Fed has a long road ahead as it attempts to catch up to the COVID-19 stimulus packages and tame inflation, many investors remain unsure how long it may take for the markets to stabilize. CNBC once again turned to Cecchini to learn more.
“I think it’s a very similar market to 2018 relative to the tightening that’s going on vis-à-vis the Fed,” says Cecchini. “But I think the biggest difference here, and it’s something none of us have seen in a while, is that inflation is here.”