An 88 Percent Chance the Fed Hikes by Three-Quarters of a Point Today, Then What?

November 2, 2022

•

5:18 pm

•

40 comments

•

Economics

Target Rate Odds for Nov 2 2022 ahead of Nov 2 Decision

Target rate odds are from CME Fedwatch

December 14, 2022 Meeting

Target Rate Probabilities for December 14, 2022 as of November 2, 2022

February 1, 2023 Meeting

Target Rate Probabilities for February 1, 2023 as of November 2, 2022

March 22, 2023 Meeting

Target Rate Probabilities for March 22, 2023 as of November 2, 2022

June 14, 2023 Meeting

*Target Rate Probabilities for June 14, 2023 as of November 2, 2022*

September 20, 2023 Meeting

*Target Rate Probabilities for September 20, 2023 as of November 2, 2022*

December 13, 2023 Meeting

Target Rate Probabilities for December 13, 2023 as of November 2, 2022

Terminal Rate

There are two additional meetings that I did not show, in July and November of 2023.

The market expectation of a terminal rate is 5.00 percent in June or September of 2023.

A cut back to the 4.50% to 4.75% is then expected by the end of 2023.

The schedule of expected hikes may change substantially in a few hours depending on what Fed Chair Jerome says.

Looking ahead, the moment the Fed pauses from the expected schedule following today’s meeting is the moment expected increases in the rate of hikes reverses for good.

Right now, I highly doubt we get to 5.0%. In fact, I expect we will see our last hike no later than December 2022 at 4.25% to 4.50%.

A recession will then be obvious.

This post originated at MishTalk.Com.

Thanks for Tuning In!

Please Subscribe to MishTalk Email Alerts.

Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.

If you have subscribed and do not get email alerts, please check your spam folder.

Mish

Subscribe to MishTalk Email Alerts.

Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.

This post originated on MishTalk.Com

Thanks for Tuning In!

Mish

40 Comments

Newest

Oldest Most Voted

Inline Feedbacks

View all comments

8dots

1 year ago

The most important data is Black Friday, JP will not destroy Black Friday. TY monthly isn’t plunging TY is > Oct close. DX futures is slightly up, @111.36, but below Sept 26 low @ 111.54. The strength of the dollar is transitory !

WATERWIZ

1 year ago

The Price Paid sentiment indicator published this week went down below 50. Inflation ? The high was 87 half a year ago.

Captain Ahab

1 year ago

What does today’s increase (0.75 +/-) mean for the yield curve? Fed funds are at 3.25 today; it was 0.25 a year ago, btw.

At 4% short term, will we see more/continued inversion of the yield curve, or does the long term rate finally go up to ‘rational’ levels? If so, the impact on pension funds etc could be a significant factor in future hikes.

Oh, the dilemma! Some might say conundrum? Then, there is this ‘gem’ on ZeroH: Yikes. The Federal Reserve Lost $4.1BN Last Month… Bankruptcy by Spring.

The Fed has lost control-damned to fail whatever they do.

MarkraD

1 year ago

Reply to Captain Ahab

LOL, yes, I’m convinced the Fed’s gonna file bankruptcy and then the U.S. will have to submit to Putin, Zerohedge is hilarious.

Their post today about making a “prescient” prediction yesterday that the Treasury would “announce” potential buybacks today, when there’s been talk of a Treasury buyback for weeks….and today was the scheduled quarterly minutes.

Captain Ahab

1 year ago

Reply to MarkraD

I referred to it as a ‘gem’ for a reason. ‘Bankruptcy’ occurs when the liabilities (greatly) exceed the assets by more than the ‘equity’. However, the Fed can ‘fake’ the value of the assets as they wish, so ‘bankruptcy’ will not occur.

The underlying point is, as yields increase (from near zero to 4%), prices plummet, far more than going from say 4% to 8%. In this situation, any portfolio of long bonds reduces in value. Applied to real money…. as in pension funds etc, the damage is increasing. England was low-hanging fruit. Who is next?

MarkraD

1 year ago

Reply to Captain Ahab

“the Fed can ‘fake’ the value of the assets as they wish, so ‘bankruptcy’ will not occur.”

You saw the humor of a CB going bankrupt.

ZH Commenters take the bait and run with it, angrily calling anyone idiots or sheep for interrupting with facts.

The rest, no debate, but again, rates were terrifyingly low in 2020, not likely we’ll ever see that again, nor any event that might lead to the need for it, we …hope.

Captain Ahab

1 year ago

Reply to MarkraD

Rates should never have been zero/negative real rate, but were. Likely again? With the corrupt irresponsible leadership throughout DC, who knows?

Lisa_Hooker

1 year ago

Reply to Captain Ahab

“Bankruptcy is one of those mechanisms that can be preferred by an insolvent. Bankruptcy is permanent, whereas insolvency is temporary. Insolvency is involuntary, whereas bankruptcy can either be voluntary or involuntary. Bankruptcy is a legal procedure for resolving insolvency, whereas the latter is merely a financial state.”

The Fed is insolvent.

The Fed may be out of control for now.

Captain Ahab

1 year ago

Reply to Lisa_Hooker

Agreed on the definitions. Moral and fiscal bankruptcy has a better ‘ring’ to it. Meanwhile, I hear the Bank of England is getting a few billion pounds to cover its ar$e. God Save the king.

ajc1970

1 year ago

“Then what?”

Time to start hunting for our Florida home I guess.

Best guesses on how long it takes these rates to translate to a bottom in the housing market? My guess is about 12 months.

TexasTim65

1 year ago

Reply to ajc1970

If you want something cheap, I’d look in Ft Meyers. There will be lots of places available there with some hurricane damage as plenty of people will have lost everything with little/no insurance and have to sell.

KidHorn

1 year ago

Reply to TexasTim65

I’ve read Florida homes start to mold up after a few weeks with no AC in humid weather. I would locate a good local home inspector before buying anything near there.

ajc1970

1 year ago

Reply to KidHorn

I’ve heard the same — homes in Florida mold up if not actively managed.

TexasTim65

1 year ago

Reply to ajc1970

That’s 100% true.

Definitely need a good home inspection especially for mold.

Lisa_Hooker

1 year ago

Reply to KidHorn

Cheaper to have mold allergy tests performed. 😉

ajc1970

1 year ago

Reply to TexasTim65

We’re looking along the Ocala-Gainesville corridor — land, not so hurricane vulnerable, country living in a red state (won’t buy in Gainesville city limits)

Maybe we’re having some “grass is greener over there” vision, but it can’t be worse than 12-miles out of Portland OR, where we currently live.

Lisa_Hooker

1 year ago

Reply to ajc1970

Why would you want to move away from such caring outspoken people?

TexasTim65

1 year ago

Reply to ajc1970

Before you come here from Portland, just make sure you don’t or won’t miss the mountains and forests. Florida is incredibly flat and often considered treeless (palms and some scrub trees, very few majestic trees or forests like you get on the West Coast) by people moving in from elsewhere.

Humidity can be a shock too for those not used to it.

ajc1970

1 year ago

Reply to TexasTim65

I’m pretty much allergic to every tree, grass and weed. Oregon’s greenery is aesthetically pleasing to me, but I can do without it, especially every Spring.

Lived in Bangkok for a couple years, lots of Caribbean travel — know and enjoy the weather I’m expecting there. The wife… well, she’ll just need to adjust 🙂

Lisa_Hooker

1 year ago

Reply to TexasTim65

But can you lay around on the beach and eat coconuts and pineapples?

Lisa_Hooker

1 year ago

Reply to TexasTim65

…and it you can find someone that was severely injured in the hurricane with immense medical bills and no insurance you can really low-ball an offer. Vultures come in all forms.

TheCaptain

1 year ago

I’d love to blame the coming collapse of the Global Debt Ponzi (GDP) on Brandon but that would lack intellectual honesty. Assuming the fed hikes today, the fed funds rate will be 3.75 to 4%. People still have jobs and so this will not be the end of the world from that perspective. But it will still be far short of real positive interest rates. The most affected by these moves is the system itself which is creaking under the load. Congress just sent a letter to the fed asking for them to back down on the interest rates because they are hurting people and institutions. At this point, take your pick: massive austerity with mass starvation or hyperinflation with mass starvation. The carrying capacity will be the biggest victim either way. hundreds of millions of people worldwide who have been supported by debt based existence will simply have to die off.

SAKMAN

1 year ago

Reply to TheCaptain

Indeed – hyperinflation, stagnation, or deflation the outcome will be the same for the people at the bottom of the economic spectrum.

A war will simply expend resources, and if a new order is found afterwards the problems of oligarchy will still be the same if not worse due to the new technological controls over society that are available. Do not think that anything better is coming. In fact, any one that is not an oligarch should be terrified.

No one will be grateful for the lack of starvation and general prosperity the rising tide of the global debt ponzi scheme, or all of the technological improvements that for example fed China and India over the past 40 years. All will be forgotten if we find that it wasnt a durable enough system to persist.

In the meantime, I dont think it’s over just yet. The vast majority of USD in circulation is debt and many yet to be deployed high tech weapons will be the surrogate for “Tony and Nicky”. You know, the guys sent to collect on those debts. The agreement was that the debt would be paid back, and these agreements are a basis for civilization. If they are broken, scary things happen before a new basis is formed.

You may own nothing at the end.

Lisa_Hooker

1 year ago

Reply to TheCaptain

I’ll take mass starvation for $1000, Alex.

MarkraD

1 year ago

Was starting to think the Fed might even get a little softer a few days ago, then – JOLTS.

Remembering the “Kill the Fed” crowd go insane, ranting “The Fed’s out of ammo!!” in the 2020 Covid crash with rates down to dirt, I can see why the Fed would want to press while they can.

Hope they maintain vigilance down the road for signs of the inverse.

SAKMAN

1 year ago

Reply to MarkraD

I wonder if Treaury will simply print and start buying back the national debt.

MarkraD

1 year ago

Reply to SAKMAN

link to home.treasury.gov

They’ve been mulling it for weeks.

SAKMAN

1 year ago

Reply to MarkraD

Thank you for the information. I have wondered how much of the debt they would buy back through printing as interest rates increase. It is effectively the same as paying interest, but it undoes the need for future interest rate payments.

Captain Ahab

1 year ago

Reply to SAKMAN

Henceforth, this is known as QF…. quantitative f*(kery.

Maximus_Minimus

1 year ago

The charlatans would be wise to keep interest rates high no matter what their inflation bean counter says.

At least until such time someone finally figures out asset inflation from bean inflation.

Maybe Dr. Gotee-Sharleton can get a useful Nobel Prize?

billybobjr

1 year ago

Biden administration took credit for the largest increase in S&S because of their leadership .

It was actually signed into law in 1972 tying it to inflation . This again shows you how stupid

the people running the government are . They had to take down the tweet after they got

fact check by twitter and others . These people are incompetent . They couldn’t run the

corner lemonade stand .

KidHorn

1 year ago

Reply to billybobjr

Thanks god twitter is in fair hands now. The dems can’t get away with flagrant lies anymore. And the republicans won’t have facts called lies.

MarkraD

1 year ago

Reply to KidHorn

…And Russian troll farms have first amendment rights!

Captain Ahab

1 year ago

Reply to MarkraD

One expects crap from Russian trolls. Twitter neutered everything except the left POV. With their mouthpiece under new management, the left is screaming. MSM are the real trolls, and have been for two decades.

MarkraD

1 year ago

Reply to Captain Ahab

I think it just worked out that way where Putin supports the right’s foreign policy over the left and went extreme with fake accounts/bots that Twitter shut down, the right also had stronger anti shut-down messages, many were dangerous (fake medicines, wrong stats, erroneous med advice, drink bleach), Jan 6th messages of violence, so the end result would look like the right has been censured.

Well, actually, yeah, the right has been censured more, and if the Dems start promoting gathering at the Capitol with AR-15’s or drinking household cleaning products as remedies, I’m sure they would too.

Hell, they banned a president and I bet his attorney’s got a long needed night’s sleep.

billybobjr

1 year ago

Reply to MarkraD

You are crazy . Dozens of secret service agents were injured on the assault by BLM and antifa over 3 week period on the White House . Nothing done

by the police and FBI or justice department . There were no weapons found on anyone inside the capital . Thousands of

tweets and hours of TV on Russia collusion and Steel dozier and on and on . It was all a lie promoted by the establishment in

DC and their minions the MSM but they do have fools like you that believe it

KidHorn

1 year ago

Reply to MarkraD

yea. Russian Trolls farms are the one responsible for Hunters laptop. I can’t believe some still believe this nonsense.

KidHorn

1 year ago

What they do in the future isn’t solely determined by inflation. They also have to look at t bill rates. The government is running persistent high deficits, so there’s a steady flow of new t bills. Foreign governments have been net sellers recently and the FED is QT’ing, all of which will put upward pressure on t bill coupon rates as to attract non-government investors. They don’t want a big gap between the funds rate and the t bill rates.

Maximus_Minimus

1 year ago

Reply to KidHorn

If the yield is high enough, there will be non-government investors no matter the debt mountain, at least until bankruptcy.

hmk

1 year ago

Reply to KidHorn

I think they will continue to raise until inflation moderates. It won’t get back to the 2% rate( should be 0%) but at that, maybe 3-4 % , point they will have to hold steady. Powell pretty much said so already. You are right about the yield on treasuries, they will go up with everyone dumping them, especially China after seeing how we stole Russian money. The rest of the world will be selling to defend their devaluing currencies. Whenever the treasury market starts to freeze up like it did in England recently, is when the Fed will be forced to start buying treasuries again. Meanwhile the beatings will continue until morale improves.

An 88 Percent Chance the Fed Hikes by Three-Quarters of a Point Today, Then What?

Share this:

Recommended Articles

Stay Informed

Subscribe to MishTalk