USD - Fundamental Outlook for the Current Week by Morgan Stanley

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Sergey Golubev, 2015.08.25 06:52

FOMC will raise rates in March 2016 - Barclays (based on efxnews article)

Barclays Capital made a conclusion that Fed rate hike will be March 2016. Barclays explained that FOMC can raise rates in December 2015 but FOMC FOMC may push rate hike in Mrach because of volatility of the market.

• "Given the uncertainty around the current global outlook, the timing of the rate hike seems more uncertain than usual. Should this episode of financial market volatility prove transitory, the FOMC could raise rates in December. On the other hand, if the volatility proves durable or reveals greater than expected weakness in global activity, the FOMC may push the first rate hike beyond March."
• "We see a delay past mid-2016 as a relatively low probability at this point given our views on US labor markets. The US has proven durable to shocks emanating from emerging markets in the past, and we believe the current bout of uncertainty to be less pronounced than the successive shocks from developed economies that rocked global markets in 2008, 2010, and 2010."

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Sergey Golubev, 2015.08.25 18:23

Experts react to Black Monday (based on telegraph.co.uk article)

Markets now believe Federal Reserve won't rise rates until 2016, and this is what experts are talking about:

Economists at Barclays - expectation of a Fed rate rise to the first half of next year: "Given the uncertainty around the current global outlook, the timing of the rate hike seems more uncertain than usual. Should this episode of financial market volatility prove transitory, the FOMC could raise rates in December. On the other hand, if the volatility proves durable or reveals greater than expected weakness in global activity, the FOMC may push the first rate hike beyond March."

Economists at Capital Economics - September rate hike: "There are no signs of any major downturn in the US economy, economic growth in China still appears to slowing rather than collapsing and emerging markets are not about to endure a repeat of the 1997/98 Asian crisis. The current bout of market turmoil, if it continues, might persuade the Fed to hold off on raising interest rates in September. Since that volatility doesn’t reflect any genuine economic slump, however, we wouldn’t be surprised if it proved short-lived leaving the way open for the Fed to begin raising rates at some point this year."