Assessment: 7 years of plenty and 7 years of famine is as old as the Bible …
- The Fed hiked rates 50bps – as expected. That is the biggest rate-hike since the bursting of the Dot-Com bubble in May 2000.
- The Fed will ‘taper’ into its QT starting June 1st.
- The “highly attentive” comment about inflation risks signals a hawkish tone but overall this is not more hawkish than expected.
“Suddenly there came up out of the river seven cows, fine looking and fat; and they fed in the meadow. Then behold, seven other cows came up after them out of the river, ugly and gaunt, and stood by the other cows on the bank of the river.: Gen. 41:2-3
Since the last FOMC meeting, the short-term interest-rate (STIR) market has adjusted dramatically more hawkish in its outlook for the rest of the year – now pricing-in 11 more rate-hikes (that includes the expectation of 2x 25bps hikes today).
But at the same time, the expectations for subsequent easing from what will inevitably create a recession have barely budged…
Markets have been extremely volatile in the weeks since The Fed meeting (amid endless hawkish jawboning) with the dollar surging almost 5% higher against its fiat peers while bond prices have collapsed. Gold and stocks have been equally pummelled since March 16th, but as is cxlear from the chart below, stocks have been a bloodbath since the post-Fed meltup finished at the end of March)…
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