All Posts Tagged: Fed Funds rate hike

U.S. Outlook: Conflicting signals from the Fed minutes

Scott Anderson
Chief Economist

Graph showing five year breakeven inflation rateBond investors, parsing the FOMC minutes from the July meeting, sensed hesitation about the timing of the first interest rate hike from the Fed and have since soundly convinced themselves that a move in September is virtually off the table. The Fed funds futures implied probability of a rate hike in September fell from around 50% prior to the Fed minutes release to 34% on Thursday. But, I still believe the real probability of a September versus a December move is close to 50-50 with a slight nod in favor of a September move.

For more on this, see my full report. Highlights are outlined below, followed by a link to the full U.S. Outlook report, delivered on Aug. 21.

Key observations:
  • There is plenty of opportunity for better U.S. economic data in the weeks ahead to turn investors’ minds on a dime.
  • The FOMC statements have said that members need to be “reasonably confident” that inflation will return to its target over the medium-term.
  • Conflicting signals from inflation and from the Fed itself ensure a nail biter at the September FOMC.

Click here to read my full report.

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U.S. Outlook: It’s all about the jobs

Scott Anderson
Chief Economist
Graph showing monthly trends in nonfarm job creation.

There is nothing in the July jobs report that should dissuade the FOMC from an initial rate increase in September.

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