To James Demmert at Main Street Research, the market is finally coming to the realization that elevated interest rates are here to stay and the idea of a Fed pivot anytime soon is wishful thinking.“The Fed may be much more determined to raise rates - even by 50 basis points at the March meeting given the recent bout of strong economic, inflation and employment data,” Demmert added. “At the same time, the lag effect of rising rates over the past year may be slowing the economy. The risk of a recession has now increased in recent weeks, as the lag effect from the Fed’s tightening may soon start to show up in the data, just as the Fed has doubled down on raising interest rates. This combination of a weakening economy and more rate hikes would surely push the economy into a recession."

Read the full article here: Bloomberg.