Mathan Somasundaram

Aussie market fell on the open with US Fed rate hike worries and tried unsuccessfully to make a recovery for the rest of the day while WES and WPL trading ex div added to the negative performance. There is no macro risk bigger than US Fed putting up rates. The Fed is actively sabotaging any need to move sooner than later. We are of the view that we are in the middle of another “Fed Scare” cycle before Fed backtracks to a December hike. US Fed will move in December and that will be irrespective of the data as it will be the last and only real rate hike option for 2016. As we predicted last week, US Fed talked up rate hike with no real timing outlook and raised the implied odds to 40-50% for Sep rate hike. This looks like the trigger for profit taking in the markets globally before the next up cycle starts with US Fed back tracking at the Fed update on Sep 20-21. Interesting moves of the day…....…. (VIEW LINK)


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