Long-term rates improved slightly this week, if anything, but the Fed calculus is changing fast toward rate hikes — more and sooner than markets are priced for, and perhaps closer to the Fed’s “damned dots” than any of us have thought. A hike in June has decent odds, now. Here is the list of game-changers. Oil first. The Fed’s primary job is to prevent inflation, and since 1972 oil has been Enemy Number One. Oil is up to $50 per barrel. Most thought a rise from the January lows at $33 was reasonable, but the rise from $40 brought daily assertion that the glut would return quickly and prices fall anew. Not. More important for the Fed, looking out a few years, the plunge in prices guarantees suppression of new exploration and investment and a price snap-back proportion…
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