Deutsche wraps what’s bothering equities:
In our recap of the December FOMC meeting we emphasized risks that liftoff would occur in March and that balance sheet rundown could commence this year. This week’s minutes confirmed these hawkish signals and this morning’s December employment report showed further progress towards maximum employment. Accordingly, we have updated our views on Fed policy to reflect these developments.
We now expect that liftoff will occur in March and that the Fed will undertake four total rate hikes this year. As the minutes signaled, the Fed will be very nimble in responding to the incoming data, making consecutive rate hikes or even larger increments possible. Beyond 2022, we maintain
our view of three rate increases in 2023 and the terminal rate (2.1%) for fed funds.
