To The Moon

US futures climbed Wednesday and Treasury yields stabilized after a sharp retreat as markets assessed the outlook for Federal Reserve monetary tightening. The dollar gained.

S&P 500 futures rose 0.63%, Nasdaq 100 futures rose 0.93%.

Treasuries steadied after a flight to havens sent yields lower, while traders dialed back the expected pace of Federal Reserve hikes. Money-market traders priced in about 135 basis points of rate increases over the central bank’s next three policy meetings, down from about 141 basis points at Monday’s close.

New Zealand’s central bank raised interest rates by half a percentage point for a second straight meeting and forecast more aggressive hikes to come to tame inflation.

Investors are fretting growth will slow dramatically amid tighter monetary conditions to taper surging inflation and the war in Ukraine that are chocking supply chains. Sales of new US homes fell more than expected in April, and the Richmond Fed’s measure of business activity fell to a two-year low. The Fed minutes from its last meeting out Wednesday may provide some clarity.

Fed Bank of Atlanta President Raphael Bostic, who’s one of the central bank’s dovish policy makers, urged his colleagues to proceed with care. The Fed raised interest rates by 50 basis points earlier this month and Chair Jerome Powell signaled it was on track to make similar-sized moves at its meetings in June and July, a plan that both hawks and doves have since embraced to cool the hottest inflation since the 1980s.