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The big question is when the Fed will release the brakes.

There is a reasonable theory that they could reach a “moderately restrictive” level which is around 3% and then decide that 2% inflation will be underway. It would be towards the end of the year.

However, for that to happen, we would likely need a sharp slowdown in growth bordering on a recession, continued weakness in equities, and clear evidence of unlocking supply chains (and no new blockages in China). How commodity prices behave will be mixed.

Markets have clearly shifted to a growth worry paradigm, coinciding with excessive Fed tightening. So the question is what the Fed would need to see to stop the hikes and could that be lower than what I described above?

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