US inflation aftermath

Interesting day, yesterday: US Inflation for the month of August came up worse than expected, and the market was somehow discounting not only a softer number, but a Fed pivot by year end. After 8.3% YOY growth on #cpi, the odds for next week #FOMC meeting went from 50 bps to 100 bps hike. The dollar strengthened, the Yen and the Euro collapsed, and interestingly, the odds of a rate cut for 2023 also increased. In other words, investors are discounting the #fed will be hiking aggressively only to cut aggressively as well once inflation goes down (how much?) or something bad happens.

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#policymistake #ratecut #stagflation

Source: Bloomberg