The Fed Positions for a Rate Hike next MonthNovember 18, 2015
While emphasizing that “no decision had been made,” the minutes for the Fed’s Open Market Committee meeting last month included new language to specifically highlight that a Federal Funds rate hike in December “may well become appropriate.”
In the eyes of the futures market, the probability of a Fed Funds rate hike by the end of the year has jumped from 30 percent five weeks ago to 68 percent today, down from 70 percent last week.
The rate for a conforming 30-year mortgage averaged 3.98 percent last week, the highest rate since July and within 3 basis points of the 4.01 percent average rate recorded at the same time last year.
Comments from Plugged-In Readers
It wont happen. There will be another reason/ excuse.
This time it will become true. But further rate hike after December will be extremely slow.
My guess is they will raise it to a firm 25bp from its current 0-25bp (heard its around 13bp in practice) target. Then wait at least one more meeting to see what happens before deciding if they ready to go up to 50bp.
I am less sure of a hike now. its 50/50 IMO.
The world situation now is a factor.
Problems in China, exports and imports down.
Negative growth in the most recent reported GDP.
Jobs creation the past 3 months averaging, if I recall right, around 190K when it was almost 250K last year.
Things are a bit unstable now and if the Fed focuses on that I could see no rate hike this year.
Yellen likes to please the traders. Since traders have priced in a 72% chance, they won’t be disappointed.
Yes and no. The Fed answers to the corporate interests/traders, IMO, and those interests love cheap money. It has in part fueled what I think is a stock market bubble.
Its 50/50, but any increase will be minimal. Assuming there is one.
Either way it doesn’t really matter, wrt the effect on 30y rates. Fed increase already built in. No biggie IMO.
Glad i am refinancing now!
If you believe the Fed will raise rates, you still believe in Santa Claus. More QE and Negative rates are coming, and along with them a ban on cash.
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