The financial headlines yesterday tended to focus on the stock market sell-off — as you might expect on a day when the S&P 500 was down nearly 4%.

• But the more important story for the economic path ahead unfolded in the bond market, and in headlines about the Fed.

Driving the news: The Fed is now set to seriously consider raising interest rates by 0.75 percentage points this week, higher than the half-point it had long telegraphed.

Why it matters: Jerome Powell's Fed has tried to avoid causing unnecessary market volatility by communicating future actions. An abrupt move the day before a policy meeting shows that a shift in America's psychology around inflation has rattled the central bank's leaders.

• Monday, June 13, is a day that bond traders and Fed obsessives will remember for a long time — and could have a long tail of implications for the economy, and how policy and markets intersect.

The timeline: It's worth unpacking exactly what happened, and when, to cause this shift.

• Friday morning, May's Consumer Price Index showed inflation that was both high (8.6% over the last year) and broad-based. Later that morning, the University of Michigan consumer sentiment survey showed a jump in consumers' longer-term inflation expectations.
• That fueled a huge sell-off in the bond market, driving interest rates higher, as investors bet it meant the Fed would raise rates more. Yesterday morning, a New York Fed survey also pointed to an unwelcome shift in consumer psychology.
• Yesterday afternoon, the Wall Street Journal reported that an 0.75 percentage point rate hike will be on the table, followed soon after by other publications (including Axios). Bond prices fell and rates spiked further.

Besides CPI, the other data points are third-tier indicators at best. And notably, all this was happening while the Fed was in its customary "blackout period" before a meeting, when officials do not give speeches or on-the-record interviews.

Between the lines: Powell has long emphasized the need to be "nimble," a word he has used six times in three news conferences this year. But in practice, he has preferred to communicate policy shifts gradually, in part so the Fed can act as a steadying presence.

• The biggest change in the last 24 hours is not that there might be a slightly bigger rate increase, or even that rates will ultimately end up higher than once thought.
• It's that top Fed officials now fear inflation is becoming more entrenched, and therefore are willing to risk being more disruptive to markets and the economy.

The bottom line: With the Fed more willing to risk breaking things to try to bring inflationary psychology down, it means the range of policy possibilities will widen in the foreseeable future.

How are America's top CEOs feeling about the economy? It depends on if you're a glass-half-full or half-empty type.

• The good news: As of early June, 177 leaders of America's biggest companies surveyed by the Business Roundtable — brought to you first in Axios Macro — were still planning to hire and invest at high rates.
• The bad news: Their outlook deteriorated rapidly compared to early March — the sixth-fastest drop in the 78 quarters the survey has been conducted.

Why it matters: More executives pulling back on hiring and capital spending implies a slowdown in the last year's booming growth — and an economy that is more vulnerable to recession.

• 50% plan to increase employment levels in the next six months, down from 68% last quarter.
• 47% say they will increase capital investment plans, down from 60% last quarter.
• 72% expect sales to increase, 10 percentage points less than last quarter.

Read the full story with details on what General Motors CEO Mary Barra and Business Roundtable CEO Josh Bolten are calling on Congress and President Biden to do.