Traders and Economists Speculate on Fed's Next Move Amid Growing Inflation Concerns.

Traders are betting billions on an imminent Fed pivot towards easy money, but recent inflation data and revisions to government data show that the Fed's progress on inflation is less than previously thought. Interest rates are still too low to put meaningful pressure on core inflation, and the Fed will likely have to hike to 6% to bring inflation down to its 2% target. The high-stakes poker game between traders and the Fed over the proper level of interest rates fundamentally affects whether investors are getting enough compensation in stocks for the risk they're taking. The stock and housing markets are priced contrary to long-term fundamentals, and something eventually has to give.