What the SVB collapse means for the Fed

Even if the collapse of several mid-tier banks doesn’t develop into a full-blown systemic crisis, it will more than likely trigger a credit crunch. That raises the risk that the economy will suffer a harder landing, which would accelerate the needed disinflationary adjustment. Under those circumstances, it makes sense that futures markets now expect little in the way of additional rate hikes from the Fed, and instead see rates being cut later this year.