Welcome to this month's update on our speedometers. The key takeaway this month is that our higher-for-longer investment thesis remains intact, and we continue to be cautious on the outlook for the economy and financial markets in the next six to nine months. Accordingly, we've adjusted a number of our speedometers. Let's start by focusing on the dials related to monetary policy, interest rates, and the yield curve.
Fed officials have struck an even more hawkish tone since September's FOMC meeting. CNR continues to have an above-consensus path of hikes by the Fed. So this month, we have lowered both the monetary and interest rate dials. Policymakers are willing to sacrifice economic growth in attempts to rein in inflation. The Fed's credibility is increasingly at stake, so we continue to believe they'll err on the side of being conservative by keeping rates higher for longer.
While inflation may be peaking in the short term, risks from geopolitical shocks remain and wage pressures remain elevated. As higher-than-expected inflation readings continue, we are projecting the Fed officials will raise the Fed funds rate to 4.5% to 5% next year and this pressure will likely persist through the end of this year and into 2023, with the yield on the 10-year likely to remain in excess of 4%. We've also lowered our yield curve dial a bit further into the red zone.
On the positive side and as illustrated with our green speedometers, the outlook for consumer spending remains green, supported by wage gains and extra cash on hand. The back-to-school spending season was solid and historically has a high correlation with solid spending in the year-end holiday period. Also, our labor market dial also remains green, supporting the outlook for consumer spending.
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