FED waits, but the longer they wait, the higher yields may continue to climb.
Notice on the chart the “IF HIKE” zone for the current cycle. Rates are already much higher than in the previous two cycles, yet inflation pressures remain sticky, especially with energy prices moving higher again.
Markets are starting to realize that delayed action can keep long-term yields elevated, tightening financial conditions even without additional hikes. That’s why bond markets remain one of the most important signals to watch right now.
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