The entire global rate cycle has flipped from cuts to hikes.
For about 15 years, the reflex everyone learned was simple. When things get shaky, central banks cut. They print, they ease, they backstop the system, and asset prices go up. That's the world we've been trading in since 2008. It's the muscle memory behind every buy-the-dip instinct in the market.
That's not the world anymore. A large majority of the world's central banks are now overshooting their inflation targets, and the Street is pricing hikes, not cuts. Across the board.
Start with the Fed. No cuts are expected this year, and the market is now starting to price in a small chance of hikes by year-end. Trend and trimmed-mean inflation gauges have stalled out around 3% and headline CPI is drifting toward 4%. The June 17 meeting is the first one chaired by Kevin Warsh, and he's a genuine wildcard. He's signaled a more dovish, smaller-balance-sheet philosophy, but he's walking into rising inflation on day one. What he says will