Interesting Rate Hike Odds: March favors Hikes, December Favors Cuts

Fed fund futures show a hike in March is more likely than a cut. In December, the opposite is true.

According to Fed Fund Futures on CME FedWatch, the odds of of a Fed interest rate hike in March outweigh those of of a hike in December of 2019.

In March, allegedly there is a 5.6% chance of a hike. By December, it looks like this.

Which Way?

I suggest "The Under", rate cuts.

Mike "Mish" Shedock

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Casual_Observer
Casual_Observer

The rate matters less than the 20B per month the Fed is withdrawing from assets. Powell is a hawk until proven otherwise.

AWC
AWC

So, is the Fed going to extend it's "inflation targeting range" to stawks as well? Will Jay Powell be announcing 'We are going to target a DOW range between 20,000 and 25000?' Will this be extended to house prices too? Groceries?

Again, the Fed put entirely too much effort in blowing these "Wealth Effect" bubbles to simply let them go now. Just as China boasts a "Government Controlled Capitalist" system, we seem to be entering an era of a "Fed Controlled Capitalism." At least until the Bond Vigilantes saddle up to set it right.

"I used to think, if there was reincarnation I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody." James Carville

Latkes
Latkes

The new layout is much better than the old, which was infuriatingly wonky.

shamrock
shamrock

Layout changes - good.

Sechel
Sechel

Too much talk about Fed independence from the President. That may be true but I believe the Fed is very much hostage to the news headlines. If s&p is tanking and the news is negative on the front page of the paper the Fed will pull back on its rate rises.

mrutkaus
mrutkaus

I like the new layout, more "intuitive" -- I was startled by just took a few seconds to realize it was a new layout and the vertical sequence. Sort of a top down approach.

killben
killben

If markets do not misbehave too much (as in decline 20-30%) over the next 3 months it is likely March hike will happen. Powell seems to be playing his cards well. Create a flutter (like auto-pilot), soothe nerves, get a hike in, soothe nerves (data dependent), throw some more crumbs to soothe markets if it gets nervous, clear skies, get a hike in, rinse repeat! I do not know what happens when the hike and roll-off starts really biting as in markets swooning.

killben
killben

Layout - Thumbs up from me! I found it easy to follow posts as it is in one sequence.

Mike Mish Shedlock
Mike Mish Shedlock

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