How has the banking turmoil changed the market outlook on the Fed?

Up until early March, the debate in the Fed outlook was whether or not inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term will continue to run hot enough in order to vindicate the "6% trade" in markets. That in itself was already an evolution from the start of the year, when markets were not even really considering above 5% rates.

It was all about the higher for longer narrative but after the collapse of SVB and Credit Suisse's rescue, the expectations for the Fed outlook has completely shifted. The prevailing narrative now is lower and sooner instead. Here is a great time lapse of that via the Fed funds futures' implied rate path (h/t @ James Eagle):

What a reversal! It took just 10 days. Following Silicon Valley Bank's collapse, markets have completely reversed their expectations on where the Fed will take interest rates. What are your thoughts?#interestrates #economy #markets #bankcollapse pic.twitter.com/shQcNLZGIo

— James Eagle (@JamesEagle17) March 20, 2023