Mind The Gap.
The already-wide gap between what the Fed says will happen and what the market thinks will happen just keeps on getting wider. Fed presidents are out there barking at us at every opportunity that the Fed Funds rate that it controls will be around 5.1% by year-end, or a full percentage point higher than where we are now. The stock market, by means of the Fed Funds futures prices set by large institutional traders, have this rate priced at south of 4.4%.
Such a divergence is extremely unusual and one of them will probably end up being right. If it’s the market (and historically speaking, it…
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