Fed June Hike Odds can Rise to 45-50% Before they Stabilise - Westpac
Richard Franulovich, Research Analyst at Westpac, suggests that US
interest rate markets finally “get the message” that June is live, the
market implied probability hitting 30% after the hawkish tone in the
FOMC minutes from almost zero just several days ago.
Key Quotes
“Those odds should drift higher still amid a long list of Fedspeakers in
the next two weeks including Chair Yellen, Deputy Chair Fischer,
Dudley, Tarullo, Bullard, Williams, Harker and Kaplan. Note the Fedspeak
calendar now also includes Chair Yellen for 6 June, the last engagement
before the Fed blackout period ahead of their 15 June meeting, lest
there be any residual doubts left about the Fed’s intentions then.
Would not be surprised to see June hike odds rise to 45-50% before they
stabilise. Upside risks to the USD should not extend much beyond May
payrolls (3 June) though, striking Verizon workers and auto supply
disruptions after the Kumamoto earthquake could see May payrolls print
as low as 100k and it’s not clear that Chair Yellen has shed her
uber-cautious stance.”
