Tuesday, September 13, 2016

"Goldman Lowers Odds of September Hike to 25% from 40%"

From Barron's Income Investing:
Seeing “no clear signal” of a September rate hike in the most recent cluster of speeches from Federal Reserve officials — including Fed Governor Lael Brainard‘s speech Wednesday — economists at Goldman Sachs have lowered their expectations for a rate hike in September to just 25% from 40%.
The team, led by Jan Hatzius, wrote late Monday:
Based on the June dot plot and what they have said in recent months, we estimate that there are eight Fed officials who would prefer to raise rates this month (including four voters), and four who would prefer to wait (including two voters). The views of the remaining five officials (four voters) are unclear, but we had thought Chair Yellen was leaning toward a September increase, based on her comments at the Jackson Hole Symposium, as well as the two-hike baseline in the June Summary of Economic Projections (SEP). The lack of a coordinated signal from Fed leadership in recent days suggests this is no longer the case—or was never the case to begin with—and that Chair Yellen herself favors standing pat....

The CME's Fedwatch tool has the odds of the target rate being raised to 50 basis points at only 15%.