The market's bets are becoming more hawkish, but the Federal Reserve may not fully follow suit

The one thing the market loves to do is to run through the future in advance, then pretend they just “understood it early.” Since Waller took office, expectations for tightening policies have heated up, and traders’ bets on another rate hike within the year have clearly increased. This sentiment easily pushes the June meeting into a “hawkish test.”

But the problem is, the Federal Reserve is not a parrot of market sentiment. It considers expectations but is not hostage to them. What truly determines the June decision are inflation data, employment resilience, financial conditions, and overall economic performance. If these indicators do not provide enough reason to tighten, the Fed could very well choose to hold steady first and observe.

Therefore, the most likely scenario in June is not “the market bets something, and the Fed delivers exactly that,” but rather “the market imagines the worst-case scenario first, and the Fed responds with a version that’s not as bad, but still not easy.” This kind of outcome is most suitable for financial markets because it neither leads to complete disappointment nor full confidence. In other words, everyone can find a reason to keep trading, guessing, and watching the market. #Polymarket每日热点