Fed Rate Hike?

[What Would Jesus Do?]

Will it happen this meeting?

What will the market do if there is a hike? What if there isn't a hike?

 

[Sooner-Be-Dead]

Put me down for 'no hike'.

If no hike, stocks go up 2%. If 25 hike, markets drop a few percent and rebound some.

 

[cigaretteman]

I agree with no rate hike. Too much uncertainty with the slowing of the Chinese economy.

 

[theVoicefromtheTomb]

Will it happen this meeting?

What will the market do if there is a hike? What if there isn't a hike?

Given the feds concern should be unemployment and inflation than it should begin to raise rates.

A marginal increase in the interest rate should have little impact on the stock market long term.

 

[Pepperman]

The implied probability of a hike using the Fed Funds Futures is currently 30% for the September meeting.

For October is is 41.2%, and for December 58.8%

 

[Pepperman]

Put me down for 'no hike'.

If no hike, stocks go up 2%. If 25 hike, markets drop a few percent and rebound some.

I am in agreement with you on the "no hike" comment. I don't think the predicted market reactions are accurate though. It will depend a lot more on what they SAY with regards to the action they take. I would assume if they don't hike in September, the language will be such that they expect to be hiking in October and in that case I think the market will start to price that in immediately.

 

[What Would Jesus Do?]

Given the feds concern should be unemployment and inflation than it should begin to raise rates.

A marginal increase in the interest rate should have little impact on the stock market long term.

Pretty much what I'm thinking.

Wouldn't no hike would signal that the Fed is worried? Of course if they actually ARE worried, then that would be the right move. But if they think the US economy is OK and it's time to let the market play a small role in borrowing/investing decisions, then to lay back would be a dubious call.

While China and the emerging markets and a recession in Brazil, etc., are of interest, I don't think we should refrain from doing what fits OUR economy because of those considerations.

 

[HawkeyeHitman]

The fed has no idea what they are doing.

 

[What Would Jesus Do?]

I am in agreement with you on the "no hike" comment. I don't think the predicted market reactions are accurate though. It will depend a lot more on what they SAY with regards to the action they take. I would assume if they don't hike in September, the language will be such that they expect to be hiking in October and in that case I think the market will start to price that in immediately.

I think a hike will be met by a small relief rally. But since it's been baked in for a while, it won't be a big deal.

No hike might worry the markets. But, as you say, it may depend on the language.

OTOH, do you actually think the Fed would say anything that would spook the market? If they don't hike I'd bet on language that's so faux-cheerful that everybody will be wondering "then why not raise the rates?"

 

[L. Wade Childress]

the Fed isn't trying to manage economic growth or inflation at this point. they are just trying to get back closer to normal.

 

[What Would Jesus Do?]

the Fed isn't trying to manage economic growth or inflation at this point. they are just trying to get back closer to normal.

I agree. Even if you agree with the rate cuts and QE - which I did at the time - they only make sense as temporary, emergency measures.

Investors are such babies that they have to be pampered and oh-so-slowly detoxed when the medicine is removed. So now we are very late reaching this logical step. The pros know this. Which is why I think we'll get a hike, or if there isn't a hike it could unsettle the markets.

 

[NoleandDawg]

No inflation so no rate hike.

 

[What Would Jesus Do?]

No inflation so no rate hike.

That's certainly a factor. But the market distortion of command low rates isn't all beneficial. Time to back off.