Research Team at BBH, suggests that the market has not changed its mind and following Brainard's recent comments, the market had downgraded the chances (which were already modest) of a Fed hike next week.
“Maybe the suggestion that a 25 bp hike in the target range somehow would make the Federal Reserve imprudent, incautious or impatient is a bit much.
It is premature to make a hard conclusion. However, investors should be open to the possibility that the sell-off in asset prices in the US, and especially the backing up of US interest rates and the steepening of the yields curve, may be a protest against such easy monetary policy in the US. That hypothesis seems to be a corollary to the idea that monetary policy in Japan and Europe is maxed out, if not in terms of the lowest rates can go into the phantom-zone below zero and amount of assets that can be bought, then as a function of the political will of policymakers.”
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