Fed Unfiltered, Weekly Report: 11/14/22

FOMC – A 50bps Hike in Dec with a 5.0% Terminal Rate

• After Thursday’s CPI report, a 50bp rate hike is likely on the table for the December 13-14 FOMC.
  • Headline CPI decreased to 7.7% (from 8.2%).
  • Core CPI decreased to 6.3% (from 6.6%).
• The 2yr & 10yr Treasury tumbled on the news – and with the possibility that inflation has peaked and fewer hikes are on the way.
• The Fed wasn’t quite as enthusiastic:
  • Lorie Logan, Dallas Fed: “This morning’s CPI data were a welcome relief, but there’s still a long way to go.”
  • Mary Daly, SF Fed: “That’s a welcome piece of news, but one month of data does not a victory make.”
• Five Fed officials spoke on Thursday with messaging centered around the terminal rate (possibly 5.00%), the pace of rate hikes (expect a slower approach) and the restrictive stance (depends on inflation).
• We have yet to hear from Bullard, Bostic, Williams.