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Moody’s Zandi says a Fed hike this week would be a mistake as 5% yields do the tightening

Zandi’s view runs against market pricing for at least one more hike this year, so it’s more a marker for the doves than a market mover. It does sharpen focus on the tension in this week’s Fed decision. Oil is the pivot: crude climbing back toward wartime peaks on Iran tensions lifts inflation and keeps the Fed on its hiking path, while also squeezing real incomes in a way that strengthens Zandi’s growth warning. With 10-year yields near 5% and credit spreads wider, any hawkish surprise from the Fed risks further pressure on rate-sensitive sectors such as housing and leveraged borrowers. A skip with hawkish guidance, as Goldman Sachs expects, would keep December live. --- Earlier: Major central banks take centre stage this week but will there be any surprises? --- Zandi’s case is simple: the bond market has already tightened for the Fed, and hiking into an oil shock risks doing the econom