Investors think Fed rate hikes are a done deal, Axios’ Matt Phillips writes.
Sometimes things change. For instance, expectations about Fed rate hikes.
Driving the news: Friday’s sizzling inflation report reinforced surging expectations for Fed rate hikes this year.
This means traders and investors are overwhelmingly betting the central bank will hike hard and fast to rein in the sharpest price rise since the early 1980s.
Why it matters: Higher rates from the Fed could corral prices but at the cost of higher unemployment and slower — possibly negative — economic growth.
Oh, and fears of higher rates have done a number on the markets, where rising long-term rates — which the Fed helps determine — are key inputs in the formulas investors use to value shares.
Matt Phillips, author of Axios Markets