Interest rate weighted average forecast is a Mish calculation of CME futures position data.

Before and After the June 14 FOMC Meeting

The Fed has penciled in two more rate hikes in 2023. Investors, speculators, and hedgers don't believe so. 

The June 14 data in my chart is about 2 hours before the FOMC announcement.

There has been a subtle, yet noticeable, change in market perception since theannouncement.

The market stabilized its "higher for longer" anticipation, adding about an eighth of a point to its forecast for November 2023to March 2024.

Fed Pencils in Two More Interest Rate Hikes in 2023

(Click on image to enlarge)

Image from FOMC press conference. 

On June 14, I noted Fed Pencils in Two More Interest Rate Hikes in 2023

The Fed paused hikes at its June 14, FOMC meeting but signaled a rate hike for July and one additional hike this year. 

The Long Pause Theory

The Fed does not anticipate any cuts this year and the market finally agrees as noted by the yellow highlights in the lead image. 

Although the market now agrees with higher for longer, it still perceives no room for another hike after July. 

In January of 2014, the market expects a cut of an eighth of a point. 

Not until March of 2024 does the market price in a quarter-point cut. 

Goldilocks Fed Porridge 

Interest rate expectations are usually not stable for eight months. 

However, the stock market also seems to believe in this goldilocks, just right, Fed porridge.

I don't.  

Stocks are priced well beyond perfection even if the Fed produces a miracle soft landing. 

For more on the stock market, please see The S&P 500 Gap at 4200 Closed, Now What For the Stock Market?

Also see More Challenges for the Economy Ahead - MishTalk Video With Adam Taggart

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