Consensus still looking for a recession and S&P 500 3,100 or lower but US tracking for a "growth scare" -- July CPI could fall to lowest rate since January 2021...

Over the past month, bond markets have drastically reduced their expectations for Fed tightening. This is evidenced by looking at Fed futures below:

  • after June FOMC, markets saw Fed funds (mid-point) peaking at 3.81% in April 2023
  • post July FOMC, markets now see Fed funds peaking at 3.28% in January 2023
  • 53bp less on peak FF, or 2 hike reduction
  • Fed funds peaking 3 months earlier
In other words, the bond market made a serious "dovish pivot" in pricing Fed funds into 2023. Is it any wonder ...

Over the past month, bond markets have drastically reduced their expectations for Fed tightening. This is evidenced by looking at Fed futures below:

  • after June FOMC, markets saw Fed funds (mid-point) peaking at 3.81% in April 2023
  • post July FOMC, markets now see Fed funds peaking at 3.28% in January 2023
  • 53bp less on peak FF, or 2 hike reduction
  • Fed funds peaking 3 months earlier
In other words, the bond market made a serious "dovish pivot" in pricing Fed funds into 2023. Is it any wonder ...
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