How will the markets respond to the more hawkish FOMC?

The U.S. FOMC central bank meeting in September was more hawkish than expected with FOMC board members predicting 7 rate hikes by 2024 (FOMC board member dot plot) while the Eurodollar/STIRT curve was only pricing 3-4. Chair Jeremy Powell made it clear that the ‘taper’ of $120 billion per month asset purchases ‘may soon be warranted’. He also said, ‘substantial progress on jobs has been met’, ‘substantial progress on inflation has been met’ and ‘gradual tapering to conclude around mid-2022.’ In this presentation, we will look at the market reaction to this more hawkish tone from the Federal Reserve. The charts, the trends and the risks.