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Market Is Wrong to Price in Mid-2022 Fed Hike, TD’s Misra Says

  • Inflation seen decelerating on slack in labor market, tapering
  • No rate increase until late 2023 as growth slows, TD says
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Priya Misra, global head of rates strategy at TD Securities, discusses Federal Reserve policy and the U.S. labor market on “Bloomberg Surveillance.”Source: Bloomberg

The bond market is misunderstanding the Federal Reserve by building interest-rate increases into the short end of the yield curve starting as early as mid-2022 amid elevated inflation, according to Priya Misra at TD Securities (USA).

“The market is pricing in the first rate hike literally right after when tapering ends,” the firm’s global head of rates strategy said Tuesday in an interview on Bloomberg TV’s Surveillance. “Our view is that there are huge Covid impacts on inflation that are going to start to decelerate. Growth is going to slow, inflation will peak.”