Great expectations

Question: What are your expectations for the June and July FOMC meetings?

R.J. Gallo: We expect the Fed to produce another 50 basis point hike at each of its next two meetings. They pretty much have told us that's what they're going to do. So for now, they're moving in larger increments to get the Fed funds rate up. They have communicated to the markets through their speeches, through their dot plots, et cetera that the Fed is going to be tightening extensively, and bond markets have repriced on those expectations. There's a reason why the Treasury yield curve is about one and a half to 2% higher in yield, 200 basis points higher in yield than it was at the end of last year. It's because the Fed has turned max hawkishness to fight the high inflation problem.