Following an unexpectedly weak ISM report, weak auto reports, and a weak jobs report on Friday, rate hike odds shifted from a decent possibility of two hikes by December to a roughly 50-50 chance of one hike in December.

September Cake

  1. The Fed won’t hike
  2. The Fed will yap about hiking
  3. Economists will shift their expectations of a hike to November

September 21 Meeting Odds

Fedwatch 2016-09.02

December 14 Meeting Odds

Fedwatch 2016-09.02A

August 26 Flashback

On August 26, Fed Chair Janet Yellen gave a speech telling the market to prepare for hikes.  Here is the before and after speech results.

Fedwatch 2016-08-26A

After her speech rate hike odds for December jumped to 60.9%. The odds of two hikes jumped to 14.8%.

The market has since had other thoughts. Odds of least one hike are close to 50-50. Odds of two or more hikes is 9.5%.

Odds of multiple hikes will vanish on the next poor economics report of September 21, whichever comes first.

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Mike “Mish” Shedlock