s/joeykrugFED POLICY•May 7
175
votes
8.8k
seen
Bond markets flip to 37% odds of Fed hike vs 3% cut
Markets leaning toward cuts are getting a direct pushback: the next move isn’t tilted down, and rates can just sit where they are for a while. The shift is from “cut-first” to “hold, with hike still on the table,” tied to elevated uncertainty and ongoing price pressure, especially from gasoline and broader consumer costs.
That lines up with her late-April dissent against keeping an easing bias. Pricing has already started to flip, by May 4, bond markets were around 37% for a hike by year-end versus 3% for a cut. The mechanism is straightforward: cut too early and you risk reigniting inflation, so policy stays neutral until the data forces a clearer move.
That lines up with her late-April dissent against keeping an easing bias. Pricing has already started to flip, by May 4, bond markets were around 37% for a hike by year-end versus 3% for a cut. The mechanism is straightforward: cut too early and you risk reigniting inflation, so policy stays neutral until the data forces a clearer move.
Timeline3
May 1
Beth Hammack’s late-April FOMC dissent was framed as opposition to signaling the next move was likely a cut.
May 4
Market commentary highlighted repricing toward higher-for-longer, including higher odds of a hike than a cut by year-end.
May 7
Hammack said the signal that the next Fed move would be a cut is misleading and that rates may stay on hold for quite some time.
1 comment
May 7