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 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 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)."