FOMC Meeting – Jan/Feb

Like most in the market, at TGM we like to keep a close eye on potential US Fed Rate movements. One of the many ways in which we track this is through our own TGM Federal Reserve Rate Movement Calculator which identifies the probability of a rate increase or decrease based on the US Fed Fund 30 day Futures contract prices across each maturity.

The Federal Reserve is not expected to raise interest rates in today’s FOMC meeting, with the TGM Federal Reserve Rate Movement Calculator suggesting only a 4% probably of the Federal Reserve raising rates.  This meeting will not include a press conference nor a Summary of Economic Projections, thus investors will solely be paying attention to the press statement. We expect this statement to note the recent pick-up in confidence measures. Consequently, with the current strong employment and pick-up in confidence, the Federal Reserve is likely to display a more hawkish tone than previous meetings. If this is the case, we expect a potential March or May hike to become more likely.

Looking at our TGM Federal Reserve Rate Movement Calculator since the US election on the 8th Nov 16 (shown below), we can see the market has put a high probability on the next rate by the June 17 FOMC meeting, with increasing potential for an earlier rate rise slowly being built into market expectations across March 17 and May 17.


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