Fed to Raise Rates in May, Then Hold: Strategist Mahajan

The transcript discusses the potential for one more rate hike by the Fed in May, with a 65% market probability. It explores the conditions needed for future rate cuts, such as significant inflation reduction or economic weakening. The bond and equity markets are potentially mispriced, leading to expected volatility. Signs of economic softness are emerging, indicating a mild recessionary environment, but also potential opportunities for recovery.

What is the probability of a rate hike in May according to the market?

• 45%

• 65%

• 85%

• 95%

What are the two conditions mentioned that could lead to rate cuts?

• Higher employment and increased spending

• Increased exports and lower imports

• Lower inflation and economic weakness

• Stronger dollar and higher GDP

What signs indicate a potential mild recessionary environment?

• Rising stock prices and increased consumer confidence

• Softening labor market and cooling housing market

• Higher interest rates and increased inflation

• Stronger currency and higher trade surplus

What might the Fed signal by the end of the year regarding rate cuts?

• No change in current policy

• An increase in rate hikes

• A pivot towards rate cuts

• A complete halt to rate cuts

What opportunity might arise from the expected market volatility?

• A time to exit the market

• A period of sustainable recovery

• A chance to increase interest rates

• A chance for immediate profit