Watch the futures market, not the dot plot
Charlie Jamieson, Executive Director at Jamieson Coote Bonds, thinks the Fed is unlikely to follow through on the two rate hikes suggested by the latest ‘dot plot’ released by their Open Markets Committee. Rather than the much-analysed dot plot, he suggests investors should instead be paying attention to the futures market. “Since February 1994… when Greenspan unexpectedly hiked, we’ve had a forward statement from the Federal Reserve. We’ve had 126 Fed meetings since that date. In all 126 of those Fed meetings, the Federal Reserve has never adjusted interest rate policy unless the Fed Funds Futures market has priced that move ahead of time.” The Fed Funds Futures currently imply an 18% chance of a hike in June and less than 50% chance for the December meeting. Watch the full video below.