U.S. Markets Expect Federal Reserve to Peak at 5.00-5.25%, Despite Wagers on 6%

Markets in the United States have adjusted their predictions and now anticipate that the Federal Reserve will raise the benchmark interest rate to a maximum of 5.25 percent by July, a quarter-point higher than their original forecast two weeks ago. This month, the Federal Reserve raised interest rates by a quarter point, following four consecutive hikes of 0.75%. Market expecting Fed to peak at 5.00-5.25%, despite big wagers on 6%.

On February 1, the Fed's Federal Open Market Committee raised its benchmark interest rate from 4.5% to 4.75%. The Federal Open Market Committee stated that, for the purpose of bringing inflation back to 2%, further increases to the target range of monetary policy will be necessary.^[0]“anticipates that ongoing increases in the target range will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2% over time.^[0]

0. “Impact of Fed's rate hikes on commercial real estate in Charlotte – Charlotte Business Journal” Charlotte Business Journal, 13 Feb. 2023, https://www.bizjournals.com/charlotte/news/2023/02/13/federal-reserve-rate-hikes-commercial-real-estate.html

1. “Traders Start to Bet Fed Will Go for Another Half-Point Hike” Yahoo Finance, 16 Feb. 2023, https://finance.yahoo.com/news/traders-start-bet-fed-another-171750344.html

2. “Wall Street Traders Betting Interest Rate Will Surpass 6% This Year” Coinspeaker, 9 Feb. 2023, https://www.coinspeaker.com/wall-street-traders-interest-rate/

3. “Persistent inflation has investors betting on rate hikes” The Globe and Mail, 15 Feb. 2023, https://www.theglobeandmail.com/business/article-persistent-inflation-has-investors-betting-on-rate-hikes

4. “Traders increasingly wager on Fed hiking policy rate to 6% by September” msnNOW, 8 Feb. 2023, https://www.msn.com/en-us/money/markets/traders-increasingly-wager-on-fed-hiking-policy-rate-to-6percent-by-september/ar-AA17gkGr

5. “Dollar Mixed Despite Bet on Fed Peaking at 6%” Action Forex, 11 Feb. 2023, https://www.actionforex.com/action-insight/market-overview/weekly-report/485896-dollar-mixed-despite-bet-on-fed-peaking-at-6/

6. “The Fed And Markets” Barchart, 13 Feb. 2023, https://www.barchart.com/story/news/14154836/the-fed-and-markets

7. “When To Expect The Fed To Raise Rates Again” Forbes, 13 Feb. 2023, https://www.forbes.com/sites/simonmoore/2023/02/13/when-to-expect-the-fed-to-raise-rates-again/

8. “Outlook for US fixed income and equities Franklin Templeton” Beyond Bulls & Bears, 12 Feb. 2023, https://global.beyondbullsandbears.com/2023/02/13/outlook-for-us-fixed-income-and-equities-amid-tighter-financial-conditions/

9. “The 6% Bet” Action Forex, 10 Feb. 2023, https://www.actionforex.com/contributors/fundamental-analysis/485735-the-6-bet