How Many More Rate Hikes?

[View this email in your browser]( Alright, you might be wondering, after this morning's CPI announcement, "how many more rate hikes are there going to be?" Fair question. While there is no way to know for sure, below I will do my best to tell you the way I am thinking about it. A few things to note: 1) The market is currently pricing in less than 2 rate hikes between February and March. 2) The 2-year yield (4.17%) is now greater than the Federal Funds Rate (4.33%) 3) The Dollar and the 2-year yield are both down today. This is a sign that the market, after the CPI number, is expecting a less aggressive Fed than before the number. The Fed certainly talks a big game, and while I may be proven wrong, the market and history are currently expecting February to be the last rate hike. This does line up with history, as historically, every time the Fed Funds rate has surpassed the 2-year yield signaled the end of the hiking cycle. This does not mean that cuts will happen immediately, nor does it mean that the market will return to a bull market. But it does show that odds now favor (and the market is pricing it this way too) that February will be it for the hiking cycle. If you were on my Q&A yesterday, you heard from me that I do not believe people will talk much moving forward about inflation, and the focus will be on job losses and DEFLATION, but we can cross that bridge when it happens. For now, history and the market are pointing to February being 25 basis points and that being it. I certainly do expect the Fed to come out and do their very best to talk the market lower (as higher stock prices convert to easier financial conditions); however, since December, the market really hasn't listened to the Fed. Stay small and win more trades, Steven STONY BROOK SECURITIES LLC IS A PUBLISHER AND DOES NOT OFFER TRADING ADVICE OR RECOMMENDATIONS. ALL INFORMATION IS PROVIDED FOR EDUCATIONAL PURPOSES ONLY AND NOT AN OFFER OR A RECOMMENDATION TO TRADE FUTURES CONTRACTS, STOCKS, OPTIONS OR FOREX. GOVERNMENT REGULATIONS REQUIRE DISCLOSURE OF THE FACT THAT WHILE THE TRADING IDEAS AND TRADING METHODS SHOWN ON THIS WEBSITE MAY HAVE WORKED IN THE PAST; BUT PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. WHILE THERE IS A POTENTIAL FOR PROFITS THERE IS ALSO A HUGE RISK OF LOSS. A LOSS INCURRED IN CONNECTION WITH TRADING FUTURES CONTRACTS, STOCKS, OPTIONS OR FOREX CAN BE SIGNIFICANT. YOU SHOULD THEREFORE CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION SINCE ALL SPECULATIVE TRADING IS INHERENTLY RISKY AND SHOULD ONLY BE UNDERTAKEN BY INDIVIDUALS WITH ADEQUATE RISK CAPITAL. AN INVESTOR COULD POTENTIALLY LOSE ALL OR MORE THAN THE INITIAL INVESTMENT. [FULL INVESTMENT RISK DISCLOSURE]( Copyright © 2023 Stonybrooksecurities LLC, All rights reserved. Want to change how you receive these emails? You can [update your preferences]( or [unsubscribe from this list](. Questions? Contact support@stonybrooksecurities.com