The thing is, expectations of tightening weaken the stock market which weakens the economy(and sentiment) which makes tightening less likely. Its self-correcting as Pimco's Paul Mcculey explained in 2009
When "NFV" and SPX converge, we can talk about "he thinks I think that he thinks that I think"...Until then, new risk has to be priced in. As I have stated in this thread before, at 1% FFs, I would price SPX at ~1000. It is going to take a new wave of technological innovation and a re-eduction of the work force to convince me that we are headed in the right direction. Until then, this is all funny money holding this market up, which is about to be slowly taken away. And this is not me saying this. It is the market itself. With the exception of WMT, most corps in the SPX have demolished earnings and the market ignores the news. The market is priced to the gums of it's teeth.
The move was hinted twice. The chairman and the fomc minutes both announced it, if the hikes comes 1 month from now it makes little difference to the market($14b and $15b outstanding in the discount and TAF) Whatever implication that can be derived from the timing of this move is immediatly offset by the Fed's Board statement that the outlook for monetary policy did not change(effectively renewing 'extended' period as of Feb 17, the day of the vote)
Well the world market agrees with you as of this writing. The market is pricing the risk as _just_ this move, not the future tightening curve. IRs just changed and mistake or not, the market reaction is the reality.
Here we go again on oil nearing $80. Hard to believe the FED doesn't care. $3. 25 per gallon gasoline seems imminent.