THE CAPITAL OBSERVER
May 2017 - published on 26th May 2017
07/ «Reflation Trades» are still on pause mode, Donald Trump get bogged down in the “swamp,” and the Fed stumped by falling CPI. Will the Fed tighten in June? From what we think, probably, but it will be the last time for 2017.
“After the Fed released minutes of its last meeting, Fed funds futures for June were largely unchanged, reflecting about a 78 percent chance for a June hike. However, odds for a second hike in September fell to 37 percent from 40 percent. The market has been doubting the Fed’s forecast for two rate hikes by year-end, and it continues to have doubts based on the action in futures. Investors have pointed to a weak stream of economic data and concerns about political uncertainty, including delays to pro-growth policies in Washington. I think June is still on the table unless the consumer or inflation blows up. They gave themselves an out. That’s just prudent,”
Aaron Kohli, BMO