15 Sep 2015
US: Stage is set for the Fed - BAML
FXStreet (Delhi) – Research Team at BAML, suggests that the stage is set for the most anticipated and eagerly awaited Fed policy meet and in our base case, it is a September liftoff, which would be a hawkish move for markets even if the Fed emphasizes a gradual pace.
Key Quotes
“This would likely be a shock to front-end rates with a selloff in 1-3y yields. The US dollar also would appreciate further.”
“A tactical delay means a greater chance for October than market pricing, while a longer delay could keep volatility elevated.”
“The macroeconomic data largely appear good enough for the FOMC- at least if the majority of Fed speeches over the past several months, culminating in Vice Chair Stanley Fischer's remarks at Jackson Hole, are any guide.”
“Meanwhile, the labor market has improved more quickly than Fed forecasts, with the unemployment rate dropping below 5% by early next year, if not sooner.”
Key Quotes
“This would likely be a shock to front-end rates with a selloff in 1-3y yields. The US dollar also would appreciate further.”
“A tactical delay means a greater chance for October than market pricing, while a longer delay could keep volatility elevated.”
“The macroeconomic data largely appear good enough for the FOMC- at least if the majority of Fed speeches over the past several months, culminating in Vice Chair Stanley Fischer's remarks at Jackson Hole, are any guide.”
“Meanwhile, the labor market has improved more quickly than Fed forecasts, with the unemployment rate dropping below 5% by early next year, if not sooner.”