Morning Report: Bostic pours cold water on 75 basis point hikes

Vital Statistics:

	Last	Change
S&P futures	4,056	-65.25
Oil (WTI)	107.41	-2.69
10 year government bond yield		3.14%
30 year fixed rate mortgage		5.59%

Stocks are lower this morning as rates continue to rise. Bonds and MBS are down.

The upcoming week is pretty data-light, as is typical after the jobs report. We will get inflation data with the CPI and PPI on Wednesday and Thursday. We will get a lot of Fed-speak however.

Neel Kashkari said that inflation will come down, but there might be some pain. “I’m confident we are going to get inflation back down to our 2% target,” he told CNBC’s “Squawk Box” in a live interview. “But I am not yet confident on how much of that burden we’re going to have to carry vs. getting help from the supply side. It’s the lowest-income Americans who are most punished by these climbing prices, and yet your policy tools to tamp down inflation most directly affect those lowest-income Americans as well, either by raising the cost to get a mortgage … or if we have to do so much that the economy were to go into recession,” he said. “It’s their jobs that are most likely put at risk.”

Separately, used car prices (which are a surprisingly big component of inflation) are down 6.4% from their January peak. “We clearly have returned to vehicles depreciating again. That’s a good news story for both inflation and for consumers looking to buy a vehicle,” Jonathan Smoke, chief economist at Cox Automotive told CNBC.

Ralph Bostick said the Fed can hike rates 50 basis points at the next two to three meetings and then re-assess. The half point increase approved by the Fed last week “is already a pretty aggressive move. I don’t think we need to be moving even more aggressively. I think we can stay at this pace and this cadence and really see how the markets evolve … We are going to move a couple times, maybe two, maybe three times, see how the economy responds, see if inflation continues to move closer to our 2% target, then we can take a pause and see how things are going.”