The Hawkish Hike: It's An Energy Driven Inflationary Shock

Summary The Fed delivered a hawkish hike, yet the 10Y yields rose, and the market is now pricing a 4.7% Federal Funds rate in 2027, above the Fed's 4.1% target. We are in an unfolding energy-driven inflationary shock, and the Fed's first hike is part of it, with more hikes coming as price of oil keeps rising. In 1974 an energy-driven inflationary shock caused an inflationary recession and a bear market, which is the likely outcome of the current situation. Andrew Harnik/Getty Images News Hawkish hike, but market wants more The Fed just delivered a hawkish hike; it increased the Federal Funds rate by 25 basis points to a 3.75-4% range and signaled another hike in 2026. This policy This article was written by Damir Tokic 14.75K Followers Follow Commodity Trading Adviser (CTA), member of National Futures Association. Professor of Finance, research on Global-macro issues. Editor-in-Chief, Journal of Corporate Accounting and Finance. Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.