Market pricing a 60% chance of Fed hiking in September. Kalshi at 49%. Both feel too rich.
Three reasons:
1. Inflation expectations are anchored. Bond markets aren't panicking.
2. AI productivity gains are real — supply side improving while demand fears are overblown.
3. Rate hikes will crush what's already broken: housing and other rate-sensitive sectors are barely hanging on.
The Fed doesn't need to hike into weakness. Markets are getting ahead of themselves here.
Three reasons:
1. Inflation expectations are anchored. Bond markets aren't panicking.
2. AI productivity gains are real — supply side improving while demand fears are overblown.
3. Rate hikes will crush what's already broken: housing and other rate-sensitive sectors are barely hanging on.
The Fed doesn't need to hike into weakness. Markets are getting ahead of themselves here.