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Economics

Markets Are Wrong on Fed Rate Hikes, Morgan Stanley’s Caron Says

  • Hiking cycles are not sufficiently priced in: Jim Caron
  • Fed-dated swaps pricing terminal rate of 4.87% for May
Bloomberg business news
Market Is Wrong About Fed, Morgan Stanley's Caron Warns
Corrected

Markets aren’t prepared for how far US central bankers are willing to go to tame the hottest inflation in a generation, according to Morgan Stanley Investment Management’s Jim Caron.

Even though Federal Reserve officials are predicting raising interest rates above 5% next year, traders continue to underprice the future path of policy tightening, the asset manager’s chief fixed-income strategist said in a Bloomberg TV interview Wednesday.