September hike unlikely despite Fed Jawboning

Angus Coote

Since the surprise FOMC rate hike in 1994, the FOMC has never raised rates, or cut them, without the ‘pre-approval’ of the Fed Funds Futures (FFF) market. If history holds, the FFF would need to price more than 60% probability before the FOMC would act. Yellen and Stanley Fisher are jaw-boning, to try to lift those probabilities in the near term and give the FOMC the greatest flexibility. On Friday's close, the September probability had risen 10% to 42%. We expect further hawkish talk from FOMC officials ahead of the September meeting. At this point September looks unlikely, and we favour a possible move in December after the US elections.


Angus Coote

Angus established Jamieson Coote Bonds with Charlie Jamieson in 2014. He started his career with JPMorgan in London, before working at ANZ and Westpac, where he transacted the first ever Australian Bond trades for several large Asian Central Banks.

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