Sagging Fed expectations

28 September, 2016

As discussed yesterday, markets will increasingly obsess about the US election over the coming few weeks, but beneath that the economy will determine if the Fed hikes interest rates before the year is out. After the last meeting, the chance of an increase in rates by year end was out over 60%, with that reading having now decreased to 50%. This shift in expectations has, in part, underpinned the weaker dollar seen over the past few sessions. For all the headlines about the election, the Fed is focuses on the economy and the messages on that have been mixed since the Fed meeting. It also has to be said that whilst the election result looks to be so close, the market will struggle to fully price in an US rate increase by year end. A Clinton victory could seal it, whilst the uncertainty caused by a Trump win could well reduce the chances of a December move. Like it or not, politics and economics are going to be ever more interlinked in this scenario. Leaving all that aside, the calendar for today is on the light side, with just US durable goods data at 12:30 GMT.

Note that we have some speakers in the form of ECB’s Draghi at 09:00 GMT, together with BoE’s Shafik just after 08:00 GMT. Oil prices are sagging below the USD 45pb level as expectations are downplayed by the Saudi’s ahead of the OPEC meeting in Algiers. There are signs of ground being gained in terms of accepting higher output elsewhere, which is why the oil price has sagged, but a significant push lower looks unlikely for now. Sterling continues to flirt with the 1.30 level on cable, whilst USDJPY is also having a torrid time with the 100 level.


Source  
Americans pass pandemic holiday in parks as death toll nears 10000025 May, 2020  

Americans sunbathed on beaches, fished from boats and strolled on boardwalks this holiday weekend, but the occasional person wearing a mask was...

New U.S. House coronavirus bill contains $3 trillion plus in aid13 May, 2020  

The Democratic-led U.S. House of Representatives unveiled on Tuesday a sweeping new coronavirus bill with more than $3 trillion in assistance to states...

The phantom threat of inflation and fears of the virus second wave12 May, 2020  

Asian indices are losing about 1% on Tuesday morning while futures for European and US indices point to open in the red. This is associated...


UK could start lifting coronavirus lockdown measures7 May, 2020  

Britain now has the highest Covid-19 death toll in Europe, according to the latest official figures, climbing past Italy which, alongside Spain, has been among the...

Scientists Create Antibody That Defeats Coronavirus in Lab5 May, 2020  

Scientists created a monoclonal antibody that can defeat the new coronavirus in the lab, an early but promising step in efforts to find treatments and curb...

Saving more money than ever is destroying the economy4 May, 2020  

The COVID-19 pandemic is hurting many spheres of the economy. To slow the spread of the virus, the government told people to stay at home. Tons of businesses...


US weekly jobless claims hit 3.84 million1 May, 2020  

First-time filings for unemployment insurance hit 3.84 million last week as the wave of economic pain continues, though the worst appears to be in the past, according...

These countries effectively contained the coronavirus28 Apr, 2020  

Countries like Australia, New Zealand and South Korea are among the few which managed to buck the trend and put a lid on the coronavirus outbreak, at least for now...

Europe Is Taking a Harder Look at China After Virus Suspicions20 Apr, 2020  

European governments struggling with the fallout from the Covid-19 pandemic are hardening their positions toward China as suspicions grow over...