Free Trial
USDCAD TECHS

Remains Vulnerable

AUDUSD TECHS

Trend Needle Points North

US TSYS

Bonds Near Highs, Yield Curves Flatter

EURJPY TECHS

Bearish Outlook

Real-time Actionable Insight

Get the latest on Central Bank Policy and FX & FI Markets to help inform both your strategic and tactical decision-making.

Free Access

Unicredit Ups Hike Forecast 100bp, Eyes Overtightening "Policy Mistake"

FED

Following the June FOMC meeting, Unicredit now expects a peak in the Funds rate at 3.25-3.50%, which is 100bp higher than their previous forecast. They see 50bp raises in Jul, Sep, and Nov 2022, with a final hike in Dec.

  • That's still below market pricing and overall consensus but "to be sure, we think this will probably constitute overtightening and, hence, a policy mistake. We say this because economic activity is weakening amid a substantial tightening of financial conditions, particularly in the housing market but also for business investment and personal consumption (the latest indication broad-based weakness in May retail sales)."
  • They see the Fed falling behind the curve as inflation declines, just as it was behind the curve when inflation accelerated. They see potential for the Fed starting to cut rates in late 2023.
133 words

To read the full story

Why Subscribe to

MarketNews.com

MNI is the leading provider

of news and intelligence specifically for the Global Foreign Exchange and Fixed Income Markets, providing timely, relevant, and critical insight for market professionals and those who want to make informed investment decisions. We offer not simply news, but news analysis, linking breaking news to the effects on capital markets. Our exclusive information and intelligence moves markets.

Our credibility

for delivering mission-critical information has been built over three decades. The quality and experience of MNI's team of analysts and reporters across America, Asia and Europe truly sets us apart. Our Markets team includes former fixed-income specialists, currency traders, economists and strategists, who are able to combine expertise on macro economics, financial markets, and political risk to give a comprehensive and holistic insight on global markets.

Following the June FOMC meeting, Unicredit now expects a peak in the Funds rate at 3.25-3.50%, which is 100bp higher than their previous forecast. They see 50bp raises in Jul, Sep, and Nov 2022, with a final hike in Dec.

  • That's still below market pricing and overall consensus but "to be sure, we think this will probably constitute overtightening and, hence, a policy mistake. We say this because economic activity is weakening amid a substantial tightening of financial conditions, particularly in the housing market but also for business investment and personal consumption (the latest indication broad-based weakness in May retail sales)."
  • They see the Fed falling behind the curve as inflation declines, just as it was behind the curve when inflation accelerated. They see potential for the Fed starting to cut rates in late 2023.