“So much for credible forward policy guidance from the Fed. Despite what the #Fed published and what Chair Jay Powell reiterated at his press conference, #markets are not buying a peak rate of 5.1% for the end of next year -- at least not as yet. Instead, they are pricing around 4.40%,” El-Erian tweeted.
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Highlighting the fact that the median forecast for interest rates went above 5%, he pointed out that it is this, and certainly not the hike of 50 basis points, that'll be deemed more hawkish than what markets expected.
Major Wall Street indices closed in the red on Wednesday. The SPDR S&P 500 ETF Trust (NYSE:SPY) closed 0.64% lower while the Vanguard Total Bond Market Index Fund ETF (NASDAQ:BND) closed 0.24% higher.
The noted economist also highlighted a factoid from Stephanie Link, Chief Investment Strategist and Portfolio Manager at Hightower Advisors.
“The number of officials seeing rates going above 5% has increased from zero in September to 17 out of 19 now. Quite a few outsiders were already there last summer,” El-Erian tweeted, citing Link.
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