Bloomberg Surveillance · Thursday, September 3, 2026
Despite claims that the economy is heating up, Michael Darda argues that credit markets do not reflect the Federal Reserve being significantly behind the curve. He points to inflation expectations remaining stable and futures markets pricing in only a few rate hikes, which he contrasts with the situation in 2022.
“But we're really not getting that from credit markets, Tom. You know, if you look at inflation expectations, even with energy prices running back up towards the highs of the year, you know, we're seeing inflation expectations at the five and 10 year horizons just sitting there just above two, consistent with price stability. And futures markets are only pricing in a few rate hikes from here.”
“And that's not indicative of the Fed being way off sides, for example, like it was coming into 2022, when the breakeven markets on a forward-looking basis were running away from the Fed. Nominal growth was running away from the Fed.”