Below is a chart and brief excerpt from today's Early Look written by Director of Research Daryl Jones.
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In the Chart of the Day, we highlight the immediate reaction in the Fed Funds Futures Market. Specifically, the expectation for Fed Hikes in 2022 went from 5.4 hikes in 2022 to 6.5. In addition, the probability of 50 basis point hike in March went from about 25% to being basically fully priced in. It is always interesting to us how these moments happen. In the two weeks prior to the CPI report, the popular market narrative had started to become that the Fed is likely to incrementally less hawkish and the Fed Fund Futures would start to discount fewer rate hikes. Obviously the market did what it usually does with a narrative that isn’t based on data. It crushed it. |
