The US economic re-acceleration scenario that came up just before Jackson Hole

The Richmond Fed President brought up a scenario for re-acceleration of the US economy on the 22nd. Although they also warned that “if the inflation rate remains high and demand does not give a signal, it will be necessary to tighten monetary policy,” with regard to the US bond market, they expressed the view that “recent movements in bond yields are not a sign of inappropriate market tightening, and there is a high possibility that they are a response to strong economic indicators.” This is reasonable based on recent strong economic indicators and the Atlanta Fed's high GDP now (5.8%). The Fed has probably begun to see even a recession, let alone the Nolan Deink scenario, as suspicious. Currently, it seems that there is no choice but to temporarily eliminate the interest rate cut scenario. Nevertheless, the market consensus for interest rate hikes is one more time.

That gap will probably be adjusted by making the high interest rate maintenance period reasonably long. 2-year bonds have been added to 5%. If you take into account the fact that the terminal rate of FF interest rates is 5.5-5.75%, it is difficult to achieve the 2% inflation target, and that the period for maintaining high interest rates will be quite long, it is unavoidable that it will be sold up to around 5.5%. There seems to be no choice but to search for long-term interest rate levels adapted to new short-term debt levels.