Volatility in 2022

The S&P 500 fell -1.9% last week on the back of continued worries of Federal Reserve monetary tightening actions for 2022.  The 10-year Treasury interest rate yield rose to just near 1.75%, up about 25bps since yields troughed in early December (12/3).  Higher valuation technology stocks led the NASDAQ lower, falling over -4.1% on the week.  Energy and bank stocks were support by higher interest rates.

The financial markets have quickly moved to the Federal Reserve beginning its short-term rate increases at the March meeting, almost a year earlier than where expectation stood at the beginning of the 4th quarter of 2021.  Quoting from the December FOMC minutes, “it may become warranted to increase the federal funds rate sooner or at a faster pace than participants had earlier anticipated.  Some members also noted that it could be appropriate to begin to reduce the Fed’s balance sheet relatively soon.”

Our sense is that the Omicron variant is causing some early 1st quarter economic weakness in the economy, and as such Fed timelines such as these might prove aggressive with the Fed waiting until some of the virus smoke clears. If the pattern of Omicron holds up, the economic impact should be largely behind us by the end of Q1.

We continue to expect a marked uptick in realized volatility for the first half of 2022.  History has shown changes in the balance sheet trajectory (flatter or declining) have coincided with at a minimum stalled stock prices.  Periods from 2011-12, 2015-16, and 2018 were all periods with corrective or sloppy and choppy trading when the Fed was slowing of reducing its balance sheet followed by a resumption of the bull market as the economy moved forward, company revenue and earnings prevailed, and investor worries were proven incorrect.

Oak Harvest YouTube Channel


Stock Talk Podcast (Weekly Market News and Opinion from Oak Harvest):


The Investor Mindset Podcast (Introduction to Critical Concepts for Investors):


First Half 2022 Outlook – Curb Your Enthusiasm Yield a Bull Market Buy.



This content contains general information and express the views of Oak Harvest Investment Services. All data, articles, and information cited are believed to be reliable at the time of creation; however, Oak Harvest does not warrant any information contained herein to be correct, complete, accurate or timely.

Oak Harvest provides links to content produced by other websites that OHFG does not control, and Oak Harvest does not necessarily approve or endorse such content and does not guarantee its accuracy. Nothing in this content constitutes personalized investment advice. Any charts, indicators, or graphs included or referenced in this content have limitations, and no such material is able, in and of itself, to provide a buy or sell recommendation for any security. Strategies and ideas discussed may not be right for you, and views and opinions expressed may change without notice. Strategies and ideas discussed will not apply to all client accounts or portfolios.

Nothing in this content constitutes a recommendation, or an offer or solicitation to buy or sell securities. Oak Harvest makes no assurance as to the accuracy of any forecast or projection made. Not all past forecasts or projections have been accurate. No current or future forecasts and projections are guaranteed to be accurate.  And future forecasts may not be as accurate as any forecasts discussed. Indexes like the S&P 500 are not available for direct investment and your results will differ. Past performance is not indicative of future results. Investing involves the risk of loss.