The Fed may be over cooking the rate hikes. The result might lower the long-term rates.
One week after the first .50% rate hike in 22 years, there were many Fed officials out using soothing rhetoric in an attempt to reassure financial markets they will be able to lower inflation while maintaining economic growth. Fed rate hikes and balance sheet reduction are intended to help slow consumer demand and there is now a growing fear the Fed will “overcook” the rate hikes and slow the US economy into a recession.
Stocks are sharply lower in 2022 and one of the main drivers is fear of a sustained economic slowdown. If the economy slows down, consumer demand will slow and that would likely lead to lower long-term rates, like mortgages. Bond yields or rates may already be giving us a sense that long-term rates may be close to peaking.