The Fed will raise rates faster than the market thinks

The Federal Reserve is expected to raise interest rates this year for the first time since 2006.

And Brian Smedley, senior US rates strategist at Bank of America Merrill Lynch Global Research, thinks that when the Fed moves, it will hike rates way faster than the market currently expects.

In our latest most important charts in the world feature, Smedley included the following chart, showing the increase nonfarm payrolls topping the increase in the working population. For Smedley, this means the labor market is tighter than some might think.

"Labor market slack is diminishing rapidly," Smedley writes, "amid the strongest job growth since the late 1990s. Population growth has also slowed markedly since the last business cycle, leading to a faster reduction in unemployment for a given pace of net job creation. This sets the Fed up to hike rates at a faster pace over the next year than the front end of the rates curve is pricing in."

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