The Fed Brings Out the Rate Hike Bazooka
With another 75bp rate hike on the cards for the July meeting, some Wall Street economists have mooted the idea of an even bigger 100bp hike.
We’ve kicked off a week full of central bank meetings in brutal fashion, with volatility in the red zone. After scorching-hot inflation figures out of the US last Friday, selling in risky assets has continued as bond yields hit new cycle highs. Moves in the fixed income markets have been huge, as expectations for interest rate hikes have ratcheted up. All eyes are on the FOMC tomorrow, as the market goes into overdrive over how high policymakers will go to tame the inflation beast.
But evidence of sticky inflation over the coming months should keep hawkish pricing and also by extension, the dollar, underpinned, even if stocks markets can stage a recovery. Of course, risky assets have been impacted by the prospect of higher rates for some time, and that trend looks to be well entrenched currently.
@TransAmericanFriendship
