Due to a strong labor market and an expanding economy, markets should expect the Fed to err on the side of hawkishness, said CME Group's Executive Director and Senior Economist, Erik Norland.

"This is the Fed that's obviously going to raise rates on Wednesday, I think there's really no question about that, but I think they'll be preparing the markets for several more increases this year, which are more or less priced in the Fed Funds futures," Norland says.

Norland noted that while he expects interest rates to hike, he doesn't think the yield curve will flatten until sometime by 2019, by which time a recession could be imminent 12 to 18 months afterward. A flat or inverted yield curve has historically been an accurate predictor of impending recessions.

On gold, Norland said that tightening monetary policy that is fully priced in could spell trouble for the yellow metal.

"Normally, when the market goes from not pricing in rate hikes to suddenly pricing rate hikes, that's very bad news for gold," he said.

 

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