(Bloomberg) — The bond market is losing confidence in the Federal Reserve’s policy tightening projections after a punishing stretch for U.S. stocks.

Traders pared wagers on 2019 rate hikes last week as disappointing corporate earnings helped drag the S&P 500 Index down 10 percent from its record high at one point Friday. Markets are now factoring in fewer than two quarter-point hikes for next year, compared with the three increases that policy makers project. Tanking inflation expectations suggest some investors already deem Fed policy too restrictive.

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Meanwhile, back on the equity farm, S&P500 valuation is near the “cheapest” since 2016.

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And yes, inflation expectations are cooling.

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