US: What would it take for the Fed not to hike in December? - TDS

Research Team at TDS, suggests that based on their expectation for a continued orderly reaction in financial conditions to unfold in the interim, TDS believe that the Fed remains in the position to hike rates as planned in December, with the odds only marginally lower in light of heightened policy uncertainty. 

Key Quotes

“Both the financial market reaction and economic data on consumer and business confidence will be closely monitored, as deterioration in either will stay the Fed’s hand. As such, we discuss what we’d likely need to see in tightening financial conditions that would be sufficient to keep the Fed from hiking in December.”

“We recommend Eurodollar steepeners, while the pending shift to a reflationary environment should help the USD broadly strengthen, in particular against the low-yielding currencies in the G10 (EUR, JPY and CHF).”