Joe Lavorgna: "We Don't Believe You"

by Joseph Lavorgna, Natixis Research

Financial markets (stocks and bonds) sold off in response to a more hawkish Fed scenario than what had been anticipated. The notorious “dot plot” now shows two 25 basis point tightenings in 2023, compared to none before. This more aggressive tightening trajectory has further galvanized discussion of when the Fed will taper its $120 billion per month in bond purchases ($80 billion in treasuries and $40 billion in mortgages). The futures market is pushing back against this policy narrative.




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