‘The Fed is going to overdo it’: Financial markets finally react to U.S. central bank’s 2023 rate outlook and weak data

Financial markets finally absorbed the Federal Reserve’s stridently hawkish interest-rate outlook for 2023, weighing the prospects of a 5%-plus level in borrowing costs in the new year against fresh signs of a weakening U.S. economy on Thursday. A bigger-than-expected drop in November’s retail sales plus weak regional manufacturing data added to the growing impression that the world’s largest economy is about to tip into a recession next year. Dow industrials DJIA had its worst day in three months on such fears Thursday, while investors fled to the safety of long-term government debt and sent the dollar — a traditional…