Fixed income traders are betting on inflation coming down, and fast. They expect YoY CPI at 2.50% by late summer this year.

Global Bond Sales Off to Record Start

Fixed-income assets are looking increasingly attractive after last year’s historic rout drove yields to the highest since 2008, especially as the prospect of a slowing global economy offers the potential for further gains.

Bloomberg forecasts US investment-grade bonds will return 10% this year.

CNN: US hits debt ceiling, prompting Treasury to take extraordinary measures.
https://www.cnn.com/2023/01/19/politics/debt-ceiling-deadline-treasury/index.html

WSJ:
Federal Reserve officials are preparing to slow interest-rate increases for the second straight meeting and debate how much higher to raise them after gaining more confidence inflation will ease further this year.

They could begin deliberating at the Jan. 31-Feb. 1 gathering how much more softening in labor demand, spending and inflation they would need to see before pausing rate rises this spring.

US GDP
Now: 2.9%
Expected: 2.6%

The share of Americans who say they live paycheck-to-paycheck climbed 3% last year

Powell: We have a different forecast from markets, given our outlook, don't see us cutting rates this year.

The Nasdaq 100 jumped 10.6% in January, its best opening month performance since 2001.

Markets don't believe Powell

https://www.bls.gov/news.release/empsit.nr0.htm

The unemployment rate fell to 3.4%, the lowest since 1969. I think fewer people file for unemployment nowadays because they have to have multiple jobs to survive and not eligible for unemployment benefits.

Unemployment rate vs. SPX

Federal Reserve Bank of Minneapolis President Neel Kashkari said January’s strong labor-market report shows the US central bank needs to keep raising interest rates.

5.4% target 🤔

CPI YoY 6.4% (predicted 6.2%)

Fed's Bullard: the Fed risks a replay of the 1970s if it can't lower inflation soon. Wouldn't rule out supporting 50bps March hike.