Remember how the Fed works – they ask the market’s permission to raise rates. As the chart above shows, the implied odds of a hike at the December went from 36% to 48% in the wake of the FOMC meeting. While this may seem like a coin flip, the market is unwilling to give the Fed approval just yet. The implied odds would need to be closer to 60% for this to be the case. The Fed will not move without the market’s permission.
Economists
don’t understand this dynamic, which is why they have predicted a hike at every
“presser meeting” all year. They have been wrong all year. Unless the
probabilities get above 60%, and stay there, they will be wrong in December
too.
The
forward curve is not priced for a hike, so one 25bps hike could be devastating
(see August for an example of a
market that is pricing in a hike). The Fed knows this, which is why they have
yet to hike.
We
believe the market is in charge. Economists think market opinion does not
matter."
En dan hebben we nog de ECB die in december gaat verruimen
en de geldmarktfondsen die in de week voor kerstmis moeten worden gemaakt om de rente echt omhoog te krijgen als de de rente verhoogt
nee, een schier onmogelijke zaak voor de FED zo'n renteverhoging. geen enkele westerse centrale bank kreeg het sinds de kredietcrisis langdurig voor elkaar
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