Marc Ostwald, Strategist at ADM Investor Services, joined Nick Batsford on the Tip TV Finance Show to discuss the chances of a Fed interest rate hike and effects the USD will have on a hike, as well as the Yuan looking attractive instead of chasing the USD.
Doubt in the market ahead of a US interest rate rise
Ostwald highlighted that before the most recent Fed meeting, rate hike bets were at 20% for December, then they moved up to 58% following the meeting. Federal Reserve interest rate hike bets are now 70%, showing how much doubt the market has, however, the majority of the market has now priced in a move. He continued that the Fed jobs data was strong, but December is still a long way off with retail and CPI data still to be released. Ostwald also commented that if the USD becomes too strong the Fed may hold back a hike.
Small returns in the bond market
Coming towards the end of the year, Ostwald outlined the difficulties in generating significant returns in a bond portfolio, with neither chasing the Eurozone market or the short-end in the US creating much return. He believed that the Yuan looks quite attractive, and urged to put money in something with decent income, and which is going to be relatively stable, instead of looking for FX gains.
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