· Event impact
July Fed Hike Probability Triples to 34.7% on Inflation and Oil Risks
Transmission path
Hawkish repricing of the front-end curve via higher terminal rate expectations.
Market mechanism
Hawkish repricing of the front-end curve via higher terminal rate expectations.
Extended read
The sudden shift in FedWatch data reflects a growing consensus that the Fed cannot ignore the combination of 3.4% Core PCE and the recent spike in energy prices. The deterioration of U.S.-Iran diplomatic efforts has removed a key 'peace dividend' expectation from the market. Investors are now hedging for a 'hawkish hold' or a 25bps hike, which would significantly disrupt the current equity valuation multiples in the tech sector.
Exposed assets
DGS10 · NVDA
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