This is the the most-important Fed dot

There's a lot of talk about 2024 and 2025 dots but consider this: A year ago there wasn't a single Fed dot above 0.75%. The Fed will ultimately go where the data takes it and if you believe inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term is coming down or a recession is coming, that's the trade and not the Fed.

However I think a big risk that markets are fearful about is over-tightening. I think the market can handle 4-5% Fed funds (though it's a strain). The fear trade is +5% Fed funds.

What's comforting markets is that not a single Federal Reserve Federal Reserve The Federal Reserve System, more commonly known as the Fed, represents the central banking system of the United States. Like other central banks globally, the Fed is responsible for monetary policy, in this case in the US.The Fed is one of the most watched and followed entities for forex traders, given its material impact on the US dollar. Founded initially in 1913, the Fed was created to perform a wide range of functions. This includes stabilizing and maintaining flexible monetary policy in the The Federal Reserve System, more commonly known as the Fed, represents the central banking system of the United States. Like other central banks globally, the Fed is responsible for monetary policy, in this case in the US.The Fed is one of the most watched and followed entities for forex traders, given its material impact on the US dollar. Founded initially in 1913, the Fed was created to perform a wide range of functions. This includes stabilizing and maintaining flexible monetary policy in the Read this Term governor or regional president sees Fed funds above 5% next year. It means no one around the table will be arguing to hike aggressively next year. That caps the terminal rate at 4.75-5.00%, which is barely higher than the 4.6% priced in.

Like I said, the Fed will go where the data takes it but with Europe headed to a recession and the dollar up 20% this year, that will soak up a lot of demand. Most don't think the Fed will get to 4.75-5.00% but if it does, it's downhill from there and the only question is the timing.