The Fed’s Rate Hike Plans Are Now "In Tatters" – What Wall Street Thinks
By Tyler Durden
Any “faint prospect” of a Fed July rate increase has entirely vanished, ING economist Rob Carnell wrote in note adding that the longstanding ING call for Sept. hike looks to be “hanging in tatters.” Here are more comments, courtesy of Bloomberg, from Wall Steet’s so-called experts, none of whom predicted the actual a Brexit outcome, about U.S. monetary policy outlook following the outcome of the U.K. referendum.
BofAML (Ethan Harris, others)
- Next Fed hike now seen in Dec., not Sept.
- Brexit vote is another in “long string of confidence shocks,” will reduce U.S. GDP by an est. 0.2ppts over next 6 qtrs
BoT-Mits (Cliff Tan)
- Brexit will tighten financial conditions, mkt reaction is going to possibly be “pretty severe” over next few trading days
Janus Capital (Bill Gross)
- Fed’s dots have no future relevancy
- Brexit was storming of the gates of finance by populists
JPMorgan (Michael Feroli)
- Fed now seen hiking in Dec., not Sept.
- There’s “exceptionally low visibility” on monetary policy outlook now
Macquarie (David Doyle, Brendan Livingstone)
- Fed could need mos. to get clear picture about Brexit’s effect on global outlook
- Unlikely to be full clarity before Sept.
Renaissance Macro (Neil Dutta)
- FOMC to stand pat in July, Sept.; 50% odds of Dec. move
- Fed might hike in Dec. if labor mkt recovers, estimates of GDP remain ~2%, financial conditions ease
Stifel (Lindsey Piegza)
- Fed “has no other option but to remain on sidelines”
- Uncertainty, volatility from Brexit takes any near-term hike “off the table”
Warburg (Carsten Klude)
- Fed may lower rates if Brexit-fueled volatility lasts
- Lowering of rates may occur before autumn if equity mkts experience sustained turbulence
Fed funds futures price 1st rate hike to 0.50%-0.75% range as more than likely for Nov.-Dec. 2017 as of Fri., compared with Jan. 2017 at Thur.’s close. Also, as noted on Friday, there is a greater probability of a rate cut than a rate hike now.
Source: The Fed’s Rate Hike Plans Are Now "In Tatters" – What Wall Street Thinks
