Treasury yields from the New York Fed, chart by MishAnticipating where the 3-month yield will be in May is much easier than figuring out where the 10-year yield will be. The Fed has penciled in quarter-point hikes in February and March with decent odds of yet another hike in May. The market agrees with that assessment.Target Rate Probabilities for May 3Target rate probabilities from CME Fedwatch. The Fed’s Commitment and Credibility Numerous Fed officials have repeated they will hike more than the market expects and stay there longer. I don’t doubt that unless something breaks in a major way. If the Fed gets in hikes in February and March, then the 3-month Treasury note will start inching towards 5 percent possibly as soon as April. The Fed ridiculously kept QE going all the way to March of 2022 for no reason other than it said it would. Supposedly, that maintained credibility. They did not want to shock the market by doing something unexpected.Now, the Fed has promised to hike rates more and stay they longer. They probably will do so to maintain credibility.The Fed would have more credibility if it did not yap its intent to market Pavlov’s dogs. Forward guidance blew up in the Fed’s face and I expect that to happen again.Yield Curve CommentsNo Recession Until When? I saw a Tweet yesterday that caught my eye but I can no longer find it.It said “No recession until the yield curve steepens.” Well the curve has been steepening, just not in the normal sense.I don’t buy the theory. Here is a similar Tweet.No 2023 RecessionScroll to ContinueEconomic data has been terrible and I expect huge negative revisions to jobs, income, and GDP at some point. It would not at all be shocking if we were in recession already. Sobering Thought on When the Market BottomsExisting Home Sales Decline 10th MonthExisting home sales from the National Association of Realtors via St. Louis FedNote that Existing Home Sales Decline 10th Month, Down Another 7.7 PercentNever before have we seen a housing collapse like this outside of recession. Terrible Economic DataThe December jobs report was anemic and the ISM services PMI was an outright disaster.Although housing in the gutter and the rest of the economy sinking fast, the Fed is committed to a course of action to maintain credibility. To steepen in the traditional sense first requires the curve to flatten. With the Fed holding rates higher for longer, that won’t easily happen unless the Fed panics due to a credit event. So, don’t count on the yield curve steepening as a signal for recession. Here is a key idea regarding the stock market:This post originated on MishTalk.Com.Thanks for Tuning In!Please Subscribe to MishTalk Email Alerts.Subscribers get an email alert of each post as they happen. Read the ones you like and you can unsubscribe at any time.If you have subscribed and do not get email alerts, please check your spam folder.Mish