JPM's strategist Nikos writes about Fed's policy mistake in the latest Flow & Liquidity. Concerns about a policy mistake have broadened. The set up now is different to when we all were talking about the inversion earlier this year, which was basically just accepting higher neutral rates. He points out: "Earlier this year, the inversion in the money market curve was more intense in the 2y to 3y forward part of the curve. The spot to 1y forward spread had been rising steeply, and the 1y to 2y forward spread was still in positive territory. This picture has seen a significant change since then as the Fed’s rhetoric has become steadily more hawkish and the hiking cycle commenced. The spot to 1y forward spread had become even more extreme until the hiking cycle started in March, while the 2y to 3y forward spread has become somewhat less inverted." He explains the implications: "An inversion at the front end of the curve has often tended to be a significant development not least because it tends to occur relatively rarely. One way to interpret this is that markets are pricing in some risk of a markets see the Fed over-tightening and as a result of taking rates to restrictive territory and slowing the economy or even prompting a recession."