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Do markets believe the Fed? Possibly

Matthew Luzzetti

Matthew Barnard

In this episode
A deep dive into what we are expecting from the Fed and why the market is pricing in a different path than the Fed's guidance.

Do markets believe the Fed? Possibly
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What we discuss
  • Key takeaways from the March FOMC meeting, with the biggest dovish surprise being that the median Fed dot remained near zero through 2023
  • With our expectations for US growth exceeding 7% this year and inflation at least temporarily rising above 2%, should the Fed raise rates sooner so they do not miss a window to tighten?
  • The market is currently pricing in a Fed lift off starting late 2022 with three hikes during 2023. To help us understand why the market is pricing in such a different path vs. the Fed, last week we ran a buy-side survey.   What were some of the key findings from that survey?
  • Aside from when the Fed actually starts to move rates higher, another key debate in the market is when they might start to taper asset purchases.   We believe that later this year the Fed will signal its intentions to begin the tapering process in 2022.  How might this play out?