Cleveland Fed's Hammack says policy must turn restrictive; December rate-hike odds jump to ~83%

What happened

Cleveland Fed President Beth Hammack said on Thursday that inflation has moved in the wrong direction since March and that 'I expect that monetary policy will need to move to a restrictive stance to bring inflation back to 2% in a timely manner.' Her hawkish comments weighed on stocks and Treasuries on a day the market was already selling off. Rate futures moved in response: markets are now pricing about an 83% chance of a 25-basis-point rate hike at the FOMC's December 8-9 meeting, up from about 79% earlier in the day. The 10-year Treasury yield, which had fallen to a 1.75-month low of 4.835%, rose back to about 4.90%.

Who’s affected

• Broad U.S. equities — hawkish Fed commentary is a headwind for stocks and bonds alike, compounding Thursday's tech-led selloff; rate-sensitive growth and AI names under the most pressure
• Treasury market — 10-year yields backed up from session lows; the U.S. dollar and bank stocks are the usual beneficiaries of a higher-for-longer / hike repricing.

Sources

barchart.combarchart.com