Is the US Fed going to hike by 75bp in July 2022?

Let's do our standard analysis to forecast the upcoming rate hike.

The Fedwatch tool is showing a 75.1% probability of a 75bp rate hike.

Let's use the 3 FED rates analysis to determine the rate hike.

IORB: 1.65% vs 0.9% in June

The IORB (1.65%) is still within the current fed rate range of 1.5-1.75%.  No stress is detected.

EFFR: 1.58% vs 0.83% in June

The EFFR (1.58%) is still within the current fed rate range of 1.5-1.75%.  No stress is detected.

On RRP: 1.55% vs 0.8% in June (Fed is paying.)

On RP: No transaction at 1.75%. (Fed is receiving.)

EFFR: 1.58%

IORB: 1.65%

When the EFFR (1.58%) is lesser than IORB (1.65%), it means that the US is still under the monetary easing condition.  The high cash of US$2.19T deposited with the US FED also shows that there is excess liquidity and the banks have nowhere to invest in other profitable investments.  Thus, we do not see any stress in the US financial system and the US FED will hike 75bp in July 2022 as stated because the Fed can still do an emergency hike in August if necessary.