stocks are down after the bank of canada unexpectedly raised interest rates wednesday as traders look ahead to next week’s policy decisions by the federal reserve and the european central bank the canadian move followed a similar one by the reserve bank of australia on tuesday although fed officials have signaled they will stand pat the probability of rates going up next wednesday as priced by futures markets has risen to 36 from 28 yesterday bonds across the globe sold off thursday as a result but whether central banks pause in june or not is less relevant than whether rates remain high for a long time investors have spent the past month disavowing their earlier conviction that monetary policy would significantly loosen again in the second half of 2023 both economic growth and inflation have been stronger than anticipated and the fed itself has hinted at further tightening this summer as has the ecb interestingly markets interpreted the canadian and australian rate increases as having implications well into the future marketbased probabilities of us interest rates being above 375 by november 2024 rose to 53 from 46 the big selloff in treasury bonds over the past month has hit maturities from two to seven years the most admittedly this may have something to do with wall street anticipating greater debt issuance but it also shows that markets are now coming around to the view that without the flexibility to adapt to stickier inflation central banks will retain a strong hawkish bias for many years to come—no matter when rates peak for investors particularly those piling into growth themes such as artificial intelligence this seems a greater danger than getting jerome powell’s precise timing wrong