When will the Fed hike? - BBH
|Analysts at Brown Brothers Harriman explained that investors are more comfortable with a December hike rather than a September move, and the November meeting is too close to the election to be live.
Key Quotes:
"The effective Fed funds rate has risen by around three bp over the past month to 40 bp. If the effective Fed funds rate remains at 40 bp until the FOMC meets in December and the Fed hikes then, fair value for the December Fed funds contract is near 53 bp. The contract implies 49 bp. That is to say, nine bp (49-40) of a possible 13 bp move (53-40) or nearly 70% chance of a December hike has been discounted."
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