It seems to me that market sentiment has shifted dramatically in the last week or two and that further rate increases seem unlikely. Here’s an article in the Wall Street Journal from October 10th that illustrates this feeling. (LINK)
A sustained rise in long-term Treasury yields could be bringing the Federal Reserve’s historic rate hiking cycle to an anticlimactic end.
Top central bank officials have signaled in recent days that they could be done raising short-term interest rates if long-term rates remain near their recent highs and inflation continues to cool.
The markets for long-term interest-rate sensitive instruments like Treasuries has moved up significantly in recent weeks. That is the dampening effect that the Fed is seeking, to cool our economy and tame inflation. As inflation comes down, interest rates will stabilize, and in fact may come down. But if the economy tanks, the Fed will be forced to lower rates.
Are we at the top of the rate increase cycle? Only time will tell, but it certainly feels that way right now.