Deutsche with some alternative methods for measuring US financial conditions. I completely agree that the market has the extent of rate hikes wrong. But I still see a few more before it all goes to shit. Almost by definition the Fed has to over-tighten before it stops.
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A Volcker-like rise in the shadow rate
Several months ago we highlighted that broader measures of the Fed’s monetary policy stance, such as our shadow rate, began to show the most aggressive tightening since the Greenspan hawkish shock in 1994 (see “A Greenspanian shock to the monetary stance”).1
