Fed officials delivered a string of hawkish comments this week, solidifying
market odds of a 25bp hike in December and prompting pricing for additional 25bp
moves in January and March. US October CPI showed accelerating inf and broader
price pressures, and October wholesale prices' YoY gain rose to the highest
level since 2022, strengthening the case for tightening. New York Fed President
Williams said inf remains too high; Chicago Fed President Goolsbee called the
data worrying; Dallas Fed President Logan said faster tightening may be needed;
Fed Governor WALLER flagged a possible 50bp move next month. Markets now price
+25bp in Dec, Jan and Mar (vs. prior market view that only Dec and Mar would
tighten); BofA has modeled hikes at the next three meetings while Santander
expects hikes in Dec and Mar. Officials remain divided on pace — some favor
gradual, small steps; Boston Fed President Collins said the direction is clear
but declined to pre-judge size or speed. Rising rate expectations have pushed US
Treasury yields higher, though weak housing, softer-than-expected AI investment
returns and potential energy-price declines remain variables for policy
decisions.
