Image from CME Fedwatch.
I thought it would be interesting to see how interest rates odds change from right before the FOMC announcement today to the odds after the FOMC press conference with Fed chair Jerome Powell.
The current May odds, pre-FOMC (not shown), are 86.8 percent for a quarter-point hike, with a 13.2 percent chance of the Fed standing pat.
My assessment is the offs of the Fed standing pat are more like 2 to 5 percent.
Looking Ahead to June
For the June meeting, there is a 12.2 percent chance of a cut. Those odds have been steadily decreasing over the past month.
The odds of a hike are only 6.4 percent.
Looking Ahead to December
In the last day, rate cut odds increased across the board.
All of these numbers my dramatically change after the FOMC press conference. I will post an update later today or tomorrow of the before and after.
The Fed Admits a Mistake in Collapse of SVB, Seeks More Power Anyway
In case you missed it, please note The Fed Admits a Mistake in Collapse of SVB, Seeks More Power Anyway
This post originated at MishTalk.Com
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Mish
Well Powell did tell those zany Russian shock jocks impersonating Zyy that there would be 2 rate hikes in 2023.
more than the traditional indexes say, because traditional indexes are focused a lot on [interest]
rates and [prices of] equities, and they don’t necessarily capture lending conditions. So we think
that, though. So there are other measures which, if they’re focused on, you know—bank lending
conditions and things like that—they show some more tightening. The question for us, though,
is, how significant will that be and how, you know—what will be the extent of it and what will
be the duration of it? And then—and then, you know, once you have—once you know that,
there’s a fair amount of research about how that, with broad uncertainty bands—how that works
its way into the economy [and] over what period of time. And so, you know, we’ll be looking to
see the first part of that—like how serious is this, and does it look like it’s going to be sustained,
and if it is, you know, it could easily have a significant macroeconomic effect, and we would
factor that into our policy decisions. I mentioned with rate cuts, rate cuts are not in our base
case, and, you know, so that’s all I have to say. Thank you very much.