Panic Attack: How The Narrative Shifted Over The Course Of The Session

*U.S. JAN. CONSUMER PRICES INCREASE 0.6% M/M; EST. 0.4%

*U.S. JAN. CONSUMER PRICES RISE 7.5% Y/Y; EST. 7.3% pic.twitter.com/J7nN2SRA8q

— Christian Fromhertz (@cfromhertz) February 10, 2022

(Click on image to enlarge)

Thursday’s session was a roller coaster. It started out with a hotter than expected January CPI Report at 8:30 am EST. The stock market initially gapped down but rallied back to breakeven in about an hour – though the yield on the 10-year treasury broke above 2% and stayed there.

BOOM goes the Bullard

*BULLARD FAVORS FIRST HALF-POINT U.S. RATE INCREASE SINCE 2000
*BULLARD: SHOULD BE OPEN TO CONSIDERING INTER-MEETING INCREASE
*FED'S BULLARD FAVORS 100 BPS INTEREST-RATE INCREASES BY JULY 1

Huge @business exclusive interview.

— Brian Chappatta (@BChappatta) February 10, 2022

“I would not be surprised by an intermeeting move either tomorrow Friday or by Monday. I know, this is crazy aggressive. We have no inside information. It is just getting to the point where the distance between the Fed’s current position and reality is too wide to ignore”-@TimDuy

— Victoria Guida (@vtg2) February 10, 2022

As if that wasn’t enough drama for one day, two hours later Politico reporter Victoria Guida tweeted a quote from Fed watcher Economist Tim Duy that he wouldn’t be surprised to see an intermeeting move as soon as Friday or Monday. This led to a further intensification of the selling. 

CME's FedWatch tool went wild this afternoon. https://t.co/RMieP9Agik pic.twitter.com/NQ7HBfPWv3

— Bespoke (@bespokeinvest) February 10, 2022

By the end of the day, Fed Futures were pricing in a 100% chance of a 50 point rate hike in March and there was a lot of nervous chatter about a possible intermeeting move as soon as Friday or Monday. 

Get ready for a lot of chatter and speculation about an emergency rate hike between now and tomorrow morning!

— Top Gun Financial (@TopGunFP) February 10, 2022

Indeed, tonight promises to be a long one as the specter of a preemptive move by the Fed tomorrow morning hangs over the market.