Mill Street Research @millstreetresearch.com · Jun 17 This is what a Fed surprise to the bond market looks like. Clearly markets were not expected the FOMC to shift as hawkish as it did. Given recent data, there are some decent arguments for a hike, though it would have relatively little impact on the main drivers of inflation.
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Monetary policy would have to be quite tight to offset the big fiscal support still going on and likely to increase as tariffs ease and war spending makes its way through the economy. If rates caused the stock market (and AI) to take a big hit, it would it potentially weaken the economy.