BNY Mellon See Fed Pricing as Gone Too Far

BNY Mellon see market pricing as having "gone too far":

• They write that after November’s Fed meeting, market pricing aligned with their view: terminal rates at (or slightly above) 5% for most of 2023. But, since the October CPI print the market likes the “slower” part of the Fed’s message, but seems to be disregarding the “higher” and “longer” parts.
• BNY Mellon think this is mispricing, and don’t think that CPI, by itself, is sufficient to render the Fed’s thinking irrelevant just two weeks after the market took it fully onboard. They don’t think that in the short- to medium-term it will lead to a dramatic and sustained decline in inflation.