Bank of America Global Research discusses the US economic outlook.

"This Fed cycle has been very unusual in that the market has been able to price a complete hiking cycle - including high probabilities of 50bp hikes, a large quantitative tightening (QT) program, and three rate cuts beyond 2023 - almost all before the first hike was even delivered. In our view, this implies that much of the market impact should now be baked in," BofA notes. 

"As a result, we believe investors should not be looking at the Fed delivery of hikes and QT as the main market-movers for this year, whether it's rate levels, curve slope, swap spreads or even other asset classes. Instead, we believe the evolving inflation outlook - in either direction - will be the main driver as will expectations around soft-landing vs hard-landing. The consensus is for a soft-landing, with inflation peaking mid- to late-2022. We believe the next big trade needs to take a stance on whether inflation behaves as most forecasters expect," BofA adds.