Fed: Markets are pricing little chance of a March hike - Westpac

According to Sean Callow, Research Analyst at Westpac, we can’t fault the Fed for consistency of message as a range of officials have been on the wires including Mester visiting Asia, reinforcing the outlook that rates are likely to be raised and every meeting is live.

Key Quotes

“We should hear more of this from Kaplan, Williams et al in the week ahead.”

“Yet markets are pricing in only a 36% chance (BBG) or just 18% (CME, probably more accurate) of a March hike. Although our base case is for the next move in June, near term risks should be to price in a higher chance of March, as decent data reinforces Fedspeak.”

“Trump’s speech must surely be more “on message” than usual, supporting the positive growth view. DXY to find buyers on dips towards 100dma at 100.40, with 103 still in sight over the month.”