Citi now sees the Fed hiking by 50 basis points in May, June, July and September

Economists at Citigroup now see a monster round of Fed hikes this year.

"We now expect the Fed to raise rates 275bp (up from 200bp) in 2022 with 50bp hikes in May, June, July and September and 25bp hikes in October and December, reaching a policy range of 2.75-3.0% at the end of 2022," they write.

"The path remains data dependent," they add.

The market is not pricing for that kind of aggressive hiking and it would certainly roil risk assets. It would also be very difficult not to invert the yield curve Yield Curve A yield curve is a line used to help determine interest rates of interest rates for a specific bond, differentiated by contract lengths. This is useful for contrasting maturity dates, for example 1 month, 1 year, etc.In particular, yield curves help underscore the relationship between interest rates or borrowing costs and the time to maturity.Some of the best examples of this include US Treasury Securities, which are among some of the most observed worldwide by traders. By determining the slope A yield curve is a line used to help determine interest rates of interest rates for a specific bond, differentiated by contract lengths. This is useful for contrasting maturity dates, for example 1 month, 1 year, etc.In particular, yield curves help underscore the relationship between interest rates or borrowing costs and the time to maturity.Some of the best examples of this include US Treasury Securities, which are among some of the most observed worldwide by traders. By determining the slope Read this Term with that kind of hiking.

This call might be weighing on the bond market here. Yields are at the highs across the board with 2s up 9 bps now to 2.21% and 30s up 5 bps to 2.56%.

USD/JPY JPY The Japanese yen (JPY) is the official currency of Japan and at the time of writing is the third most-traded currency in the world behind only the US dollar and euro.The JPY is used extensively as a reserve currency and is relied upon by forex traders as a safe haven currency.Originally implemented in 1871, the JPY has had a long history and has survived multiple world wars and other events. This was followed by the creation of the Bank of Japan (BoJ) in 1882 and the full oversight of the JPY by The Japanese yen (JPY) is the official currency of Japan and at the time of writing is the third most-traded currency in the world behind only the US dollar and euro.The JPY is used extensively as a reserve currency and is relied upon by forex traders as a safe haven currency.Originally implemented in 1871, the JPY has had a long history and has survived multiple world wars and other events. This was followed by the creation of the Bank of Japan (BoJ) in 1882 and the full oversight of the JPY by Read this Term is also climbing on the back of this.

I'm not sure it's this Citi call but this is the way the wind is blowing.

Update: Now Bank of America Merrill Lynch is out with a hawkish call as well (albeit not quite as hawkish):

"We are revising our Fed call to reflect a faster pace of hikes. We now expect 50bp hikes in June and July, and 25bp hikes at all other meetings this year (including the next one in May which will be coupled with the start of QT)."

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— Michael Goodwell (@MichaelGoodwell) March 25, 2022