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Another Move in Market’s Perception of Fed Interest Rate Hikes Sooner for Longer

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6 comments on Another Move in Market’s Perception of Fed Interest Rate Hikes Sooner for Longer

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I created the above graph in Excel manually typing in numbers as there is no data download from CME FedWatch. 

Higher Sooner, For Longer

This week, the market moved forward the terminal forward by two months from September to July. 

I ignore a 1 basis point difference, 5.36 percent in September compared to 5.35 percent in July.

In December, the market took back an eighth of a point rate cut, meaning higher for longer.

In little over a month, the December interest rate weighted average expectation went from 4.32 percent to 5.14 percent. That’s a big move.

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The Industrial production, housing reports, and Philadelphia Fed manufacturing reports were weak.

The CPI, PPI, and retail sales were more inflationary than expected.

This post originated on MishTalk.Com.

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Mike Shedlock

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6 Comments
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worleyeoe
worleyeoe
3 years ago
I’m with Bullard; 7% terminal FFR sounds about right. We shall see.
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8dots
8dots
3 years ago
DIA weekly : Dec 19 is a failed spring. It failed to breach Dec 12 high and move up. In order to move down there must be a close below
Dec 19 low. For 4 weeks DIA failed to close above Jan 17 high. Breaching it 3 times isn’t good enough. This week bar is larger than the
previous two, but it’s vol is the lowest. Something is wrong.
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Avery
Avery
3 years ago
Jack the rates up to 7.5%. Controlled demolition.
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8dots
8dots
3 years ago
SPX Anti : May 12 lo/17 high ; 3858.87/ 4090.72. SPX gap lower inside the Anti, close > Feb 10 low, but inside the Anti ?
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CRS65
CRS65
3 years ago
The market is doing what the market does…react. What will the market do if February MoM CPI comes in at 0.10 again, the YoY number goes down to 5.80%, the BLS employment report revises January’s job numbers down and February shows 225,000 jobs? The market will react again. The reality is that the inflation trend that began in July last year remains intact and whether the Fed raises 25 bp one or two more times is just splitting hairs.
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Ultracrepidarian
Ultracrepidarian
3 years ago
Reply to  CRS65
not going to happen, CRS65….the BLS is reporting the numbers that they are told to report, regardless of facts on the ground……and the CPI continues their very slow methods of adjusting their numbers downwards ….and the marketplace is still full of money betting on the Fed Put. This market is simply going to continue to grind people down, one month at a time, one investor at a time …..no profits for either shorts or longs….
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