Danske Research Team
Danske Bank A/S
The FOMC minutes from the November meeting were quite a non-event, mainly because much has happened since the meeting.
We think the higher wage growth and lower unemployment rate in the jobs report for October were sufficient 'further evidence' for the Fed to feel comfortable raising rates in December (regardless of the election result).The combination of the market rally on the back of the Trump victory and strong US economic indicators for Q4 has only made the case for a December hike even stronger. Markets have priced in a Fed hike in December with certainty.
The Fed is only expected to partly offset the fiscal boost from Trump, as the FOMC turns more dovish next year due to shifting voting rights and many dovish FOMC members (including Fed Chair Yellen) have said it may be a good idea to let the economy run a bit hot.
Markets expect four hikes from now until year-end 2018 against only two hikes before the US election. While the 'median' dots in the September projections indicated two hikes in 2017 and three in 2018, we expect two Fed hikes each year.
Still, it is worth highlighting that uncertainty is elevated, as we do not know how Donald Trump will be as President. While Trump's fiscal policy is likely to add to the reflation case for the US, this would, in our view, play out even with more expansionary fiscal policy.
This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.
Recommended Content
Editors’ Picks
EUR/USD climbs to daily highs near 1.1180 following the Fed’s decision
EUR/USD now picks up extra pace and revisits the 1.1180 region after the Federal Reserve decided to cut its interest rates by 50 bps at its event on Wednesday.
GBP/USD hits fresh tops near 1.3300 on weaker Dollar
The Greenback is now accelerating its decline following the Fed’s decision to reduce its interest rates, sending GBP/USD to fresh tops in the 1.3290 zone.
Gold clinches a record high near $2,600 ahead of Powell
Prices of Gold gather extra steam and hit an all-time top near the $2,600 mark per ounce troy as investors continue to assess the 50 bps rate cut by the Federal Reseve and warm up for the usual press conference by Chief Jerome Powell.
Federal Reserve set for first interest-rate reduction in four years amid growing bets of jumbo cut
The Federal Reserve is widely expected to lower the policy rate after the September meeting. The revised Summary of Economic Projections and Fed Chairman Powell’s remarks could provide important clues about the rate outlook.
UK CPI set to grow at stable 2.2% in August ahead of BoE meeting
The United Kingdom Office for National Statistics will release August Consumer Price Index figures on Wednesday. Inflation, as measured by the CPI, is one of the main factors on which the Bank of England bases its monetary policy decision, meaning the data is considered a major mover of the Pound Sterling.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.