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The Market Red Flags That Could Prompt the Fed to Slow Down on Rate Hikes

  • Credit spreads have surged about 70% over the past year
  • Treasury liquidity is near worst since pandemic began
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WATCH: Former Federal Reserve Bank of Atlanta President Dennis Lockhart discusses the central bank’s policy.Sourece: Bloomberg
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Strategists are looking beyond the key issue of inflation for other potential market metrics that may cause the Federal Reserve to slow its aggressive cycle of interest-rate hikes.

An ugly August reading for US consumer prices last week cemented bets on a third straight 75 basis-point move when the central bank hands down its next decision Wednesday. Setting aside a slowdown in inflation, other potential indicators that may cause policy makers to dial back their hawkishness include wider credit spreads, rising default risk, shrinking bond-market liquidity, and growing currency turmoil.