Bond Vigilantes: Fed Needs To Get Ahead Of Inflation

Recent inflationary developments increase the chance that the FOMC will vote to raise the federal funds rate at this week’s meeting. Today, Ed and Elias examine the hawkish shift and explain why it suggests that a 25bps rate hike this week is more likely than not. … Also: The Fed underestimated the persistence of the 2021-22 inflation shock and won’t be inclined to do so again—lending a hawkish overlay to the Fed’s deliberations. … And: The bond market appears to think a July rate hike is warranted, flagging broader inflationary risks than those represented by energy prices alone. … Ed reviews “Odysseus” (+ +).