FOMC Minutes: Market Underpricing The Odds Of A September Rate Hike
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
The July FOMC minutes highlighted the Committee’s reluctance to jump to any conclusions when faced with slowing payrolls and faint signs of economic strength. There was a bit of everything for everyone peppered throughout the July minutes with the overall sentiment supportive of our out-of-consensus view. – There was broad support that the 150,000 three-month average for payrolls was enough to push down the unemployment rate.
In our view, when faced with a three-month average for payrolls north of 250,000 (given our forecast for 215,000 in August), and a less-risky global market environment, the Committee will raise rates in September
– The labor market assessment was more upbeat than we expected. There were signs of relief that Brexit risks had diminished – though a few members were still worried about medium-term risks – and the Committee sounded more confident that the underlying drivers of domestic demand had strengthened. – Going into the release, fed funds futures prices suggested investors saw only a 26% probability of a hike in September, and a 53% probability of a hike by December. Now these probabilities are 20% and 48%, respectively. We continue to think the market is underpricing the odds of a rate hike in September.