27 Apr 2015
Markets pare back Fed rate hike expectations significantly – MP
FXStreet (Barcelona) - According to Dean Popplewell, Director of Currency Analysis at MarketPulse, the fixed income markets have shifted Fed rate lift-off expectations to the year end and even early next year, largely due to the disappointing Q1 data.
Key Quotes
“Nevertheless, it’s the Fed that will be keeping capital markets on its toes and the main reason why capital markets are shying away from taking any strong moves ahead of the FOMC outcome.”
“On Wednesday, U.S. policy makers are expected to convey the message that Q1 data was an aberration and that they see growth proceeding at a ‘moderate’ pace. A year on, the dynamics are a tad different for the Fed. Last year, economic activity had already started to pick up after a harsh winter, the recent retail sales and employment data continues to show signs of weakness and the reason why the USD has been underperforming of late – investors have been pushing the timing of the first rate hike further out the curve.”
“June had been the forerunner for the first rate hike, but most fixed income dealers are looking now to the end of the year or even the beginning of next for the Fed to begin their rate normalization process.”
Key Quotes
“Nevertheless, it’s the Fed that will be keeping capital markets on its toes and the main reason why capital markets are shying away from taking any strong moves ahead of the FOMC outcome.”
“On Wednesday, U.S. policy makers are expected to convey the message that Q1 data was an aberration and that they see growth proceeding at a ‘moderate’ pace. A year on, the dynamics are a tad different for the Fed. Last year, economic activity had already started to pick up after a harsh winter, the recent retail sales and employment data continues to show signs of weakness and the reason why the USD has been underperforming of late – investors have been pushing the timing of the first rate hike further out the curve.”
“June had been the forerunner for the first rate hike, but most fixed income dealers are looking now to the end of the year or even the beginning of next for the Fed to begin their rate normalization process.”