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Markets Are Betting On a 100bps Rate Hike This Month

The Breakdown

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Will the Fed Back?

The last time the fed hiked rates by 100 basis points in a single meeting was 19 81. The market appears to assume that the fed will act as it did in the last three recessions by immediately easing when the economy goes into recession. But lessons of stagflationary periods of the seventies and eighties suggest a different policy response. We believe fed will keep the federal funds rate at higher levels for longer, even if we enter a recession in 20 23 or sooner.

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