Traders Are Betting Big On Rates Both Ways: 'Hotter Inflation' Hikes & 'Recession-Crushing' Cuts

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by Tyler Durden
Wednesday, Feb 08, 2023 - 08:19 PM

The message from Powell and his pals at The Fed is clear - with no wavering from anyone at all - 'there will be no rate cuts this year'.

"My forecast and that of my colleagues... [is for] slower growth, some softening in labor market conditions, and inflation moving down steadily but not quickly. And in that case, if the economy performs broadly in line with those expectations, it will not be appropriate to cut rates this year."

But, a simple look at the short-term interest-rate curve suggests the market strongly disagrees and expects not just a 'pause' (at a higher terminal rate) but some notable rate-cuts by year-end...