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20 Apr 2015
Markets pricing in a Fed lift-off at October – BAML
FXStreet (Barcelona) - Priya Misra, Strategist at BofA-Merrill Lynch, comments that markets have priced out much of Fed hikes in 2015 due to poor economic data and a seemingly dovish Fed.
Key Quotes
“The US rates market has repriced Fed expectations significantly over the last month. In early March, Fed fund futures implied about a 70% chance of the first Fed hike at the June meeting. That probability has declined to less than 10%.”
“The market is now pricing in lift-off at the October meeting and no other hikes for the rest of 2015.”
“Not only has the market pushed out the timing of the first hike, but it has also slowed the hiking.”
“The market is now priced for less than three hikes in 2016 from about four in early March.”
“The Fed's dot plot implies 4-5 hikes in 2016. We believe price action has been driven by the recent weak economic data and the perception of a dovish Fed.”
Key Quotes
“The US rates market has repriced Fed expectations significantly over the last month. In early March, Fed fund futures implied about a 70% chance of the first Fed hike at the June meeting. That probability has declined to less than 10%.”
“The market is now pricing in lift-off at the October meeting and no other hikes for the rest of 2015.”
“Not only has the market pushed out the timing of the first hike, but it has also slowed the hiking.”
“The market is now priced for less than three hikes in 2016 from about four in early March.”
“The Fed's dot plot implies 4-5 hikes in 2016. We believe price action has been driven by the recent weak economic data and the perception of a dovish Fed.”