The Fed is creating a mess but then that is nothing new. My guess is they might be lucky to get one rate hike in, yet even that is not guaranteed. The economic is already heading south so another quarter of data might really be an eye-opener.

Of course, Powell is banking a lot of this on the low unemployment rate which is misleading. The participation rate still sucks, down a great deal from pre-pandemic levels. We also see a massive slowing of China and Germany, two of the top exporters.

This is not demand side inflation. Instead it is supply side. The Fed did not cause the problem and it is powerless to solve it. It can, however, help to send the economy further down.

My guess is the bond market moves rates up in the short term before turning down. That is what happened at the end of the last two QE cycles.