Jumbo interest rate hike rumors in the US

Following the US CPI data, talk of a 100 basis point Fed rate hike in September began. Jeffrey Gundlach, known as the bond king, said that contrary to the prevailing view in the market, he was in favor of a 25 basis point rate hike. After consumer prices in the US increased by 8.3 percent annually, exceeding expectations, economists and investment bank strategists began to emphasize that the Fed should increase interest rates by 100 basis points in September. Former US Treasury Secretary Larry Summers, who frequently emphasized that the Fed was behind the curve in the inflation increase process, argued that inflation could not be brought under control until interest rates approached 4 percent. Summers said that the Fed should increase interest rates by 100 basis points in order to strengthen its credibility. Nomura economists also increased their September interest rate forecast from 75 basis points to 100 basis points. Nomura’s Aichi Amemiya, Rob Dent and Jacob Meyer expect the Fed to end its rate hike cycle in February 2023, 50 basis points above their previous estimates, in the 4.50%-4.75% range. Goldman Sachs’ Christian Mueller-Glissmann, on the other hand, said that high yields will affect valuations across all asset groups, drawing attention to “high and sticky inflation.” Swap markets have fully priced in the possibility of a 75 basis point rate hike in September after the US CPI data. A 100 basis point rate hike is priced in as a 20% chance.