For the first time in a long time, CME Fedwatch shows the odds of a rate cut in December rose considerably above zero. Considerable means 2.6%.
Yes, that’s a long shot, but cut odds were zero on Thursday, zero a week ago, and zero a month ago.
Moreover, rate hike odds which a week ago were over 53.2% are now down to 35.9%.
December Rate Hike Odds
May 2018 Rate Hike Odds
No Hike Until June 2018?
Don’t assume stocks will retain an upward bias if the Fed does hold off, or even cuts.
Mike “Mish” Shedlock
Reblogged this on World4Justice : NOW! Lobby Forum..
Fed decisions are as data dependent and transparent as auguring the entrails of a goat.
– To see whether or not the FED will raise or cut rates I only look at the actual 3 month T-bill rate.
– For some time I thought the FED would raise rates but now I consider a ratecut more likely because Mr. Market will force the FED to do so.
Hey MIsh how about a primer on the VIX and how to play the big changes for some easy money. thanks bsb
If you want to play for big bucks you have to risk big bucks. With options rather than futures, your timing better be excellent.
Mish
Barry,
Just from the way you phrased the question, I suggest you think about other things.
With options, buying a Put has a defined max downside and unlimited upside. If things start to go against Put and you become unfortable, you can sell to minimize defined max loss.
“buying a Put has a defined max downside and unlimited upside”
Great advice, since if that were the answer to an exam, you got that incorrect.
“a Put has a defined max downside and unlimited upside”
Dan, if that was the answer to an exam it would be marked as incorrect.
No more Fed rate hikes until SEVERAL YEARS after the upcoming recession – which means 2022 – at the earliest.
The Dollar is going to drop even more on Monday…
Well lets see if the feds proceed with QT (i.e reducing their balance sheet) . Also Mish what the heck is going on with dollar ?
Mish have there ever been any odds posted as to what month-week the fed would begin to allow a tiny amount, say 10 billion a month (2.5 billion a week) to roll off its 4 trillion plus balance sheet of various securities, to perhaps judge the markets response? At that rate, 120 billion a year would blast off to a trillion 200 billion in 10 years, so it would only take a little less than 40 years to be home free!
A rate hike in June 2018. Did you mean to say a rate cut?
Has CME been an accurate predictor since Bernanke decided to monetize debt (QE)? Nope, they are less accurate than flipping a coin.
I doubt Janet Yellen has even the first clue what she is going to do (we know for certain that she doesn’t understand what the economy is doing, which is why she isn’t sure what she will recommend next).
** MEANWHILE **
The laughable college losers in Charlottesville VA tried to rewrite history books so actual truthful history wouldn’t offend the idiot snowflakes. The whole town is enveloped in riots…
Its time to treat college faculty like the radical hate groups that they are
How’s the balance sheet sales going? Maybe not as well as the Fed anticipated.
Bernanke assured us — in much the same tone as he said the subprime contagion was well contained — that unwinding the balance sheet would be accomplished easily.
The man has evaded prison and continues to collect speaker fees
Go turn on CNN… that rally against rewriting the history books just became a new leftist click phrase: White Nationalist Protest.
CNN is always trying to spin the narrative to fit their political beliefs, and they have been caught red-handed fabricating stories to increase their ratings.
The white supremacists are crazy, but if we are honest they aren’t the sharpest tools in the shed. We all have low opinions and low expectations of them
UVa faculty are supposedly better educated and supposedly mature enough to set a better example for students to follow… instead they act like children.
And then CNN uses the chaos to temporarily boost their falling ratings… I don’t expect much from white supremacists, and I don’t have high expectations of media outlets either.
No adults in the room. The people that traditionally would be expected to act like adults and set better examples — the faculty and administrators — are instead filled with intolerance. They even went so far as to try to white wash (pun intended?) history.
Shame on UVa faculty.
O/T — George Soros financed terror groups (bussed in from out of town) and white supremecist groups (also bussed in from out of town) continue to fight each other in Charlotteville VA.
The radical hate group “UVa Faculty” that tried to rewrite history have refused to accept responsibility for starting the riot in the first place. They wanted to remove a statue of Robert E Lee, it offended the snowflakes. At the time the US civil war broke out, Lee was the top (and most celebrated) general in the US Army — and like most senior US Army officers of the time, opted to fight for the confederacy once the split happened.
How can UVa faculty deny the civil war took place? How can they claim to be educated (much less tolerant) when they try to rewrite history to fit into their little snowflake world?
And then Soros pays to bus in radical groups and somehow he avoids arrest?
The white supremacists were crazy before, and they still are… they should not have joined the chaos and made the situation much worse — but lets put the blame for starting the riot on the faculty of UVa where it belongs.
Robert E Lee was a top ranking general in the US Army before he was the top ranking general in the Confederate Army — and anyone who says otherwise is uneducated and ignorant.
Every single US president (including Obama) visits the graves of Confederate soldiers buried at Arlington Cemetery. Every single President since Lincoln. The Civil War is part of our history, as is Lincoln’s example of welcoming the Confederate states back into the Union. Mending hearts and minds after the civil war was a top priority for Lincoln, its why the war didn’t resume after his assassination.
Shame on University of Virginia faculty. These riots are 100% your fault.
When an Empire crumbles,chaos becomes the norm. and leadership corrupts to the bone. Unsustainable credit coupled with extreme greed r the seeds of destruction.
Along with subversive self-serving groups. The Left is cunning and working on the young. Much more subtle than Hitler Youth but no less dangerous.
Interest rates will remain abnormally low for a long time (it’s the new normal).
The US economy will continue to plod along at 1-2% annual growth for the next few years.
Trump will claim he’s the best president the US ever had, even though he will accomplish nothing. He will probably be re-elected.
Several people on this blog will continue to preach that the stock market will crash, and the economy will tank, but they won’t, barring some black swan event.
Is there a chart for QT which shows the odds of that happening. Let us see if QT happens. My guess is if the market drops now, then the Fed will stay pat for a while as I feel it might want asset prices to cool off a bit and then ride in, being the self-appointed savior of this world:-), and say QT is off for now. After all none of the central banksters have come out of the woodwork yet despite the war like atmosphere that is being created unlike during Brexit.
PENSIONS!
Both Private and Public need higher rates.
The Fed is between a ‘rock’ and a ‘hard place’.
Choices are limited, but in most states property taxes will rise and property values will fall.
This is already happening in Europe, so this problem is GLOBAL.
Welcome to Global Asset Deflation.
Got Cash? You need 6 months worth. Short Term U.S. Treasuries are a Cash Substitute for the rich, but not for us in the 99%. For us, it is real cash.
It looks like the EU is in a worse state and stuck with NIRP so long as unable to face various potential bank collapses. Functioning banks would prefer higher rates, at least above zero.
US would do well to note that NIRP is very difficult to roll back and avoid going there in the first place.
“The Fed is between a ‘rock’ and a ‘hard place’.”
For each action there is an equal and opposite reaction.
Its time to treat college faculty like the radical hate groups that they are