- The market recognizes a strong consensus has emerged at the FOMC for 50 bp hikes in June, but the unexpectedly strong CPI report before the weekend saw the market price in about a 50% chance of a 75 bp hike in July.
- In May, the FOMC statement acknowledged the contraction in Q1 GDP but noted that household spending and business investment (final sales to domestic purchasers) remained strong.
- The Fed has begun an aggressive tightening course, but it sees the economy as strong and plays down recession worries.
For further details see:
Fed 50, BOE 25, And The BOJ To Stand Pat: Week Ahead