11 Dec 2014
Fed might hike rates in last quarter of 2015 – DBS
FXStreet (Barcelona) - The DBS team reckons that Fed might hike rates in 4Q15, forecasting a firmer USD next year, supported by the re-anchoring yield curve.
Key Quotes
“Given the latest better-than-expected headline US jobs numbers, Fed expectations are different this time around. Speculation has emerged for the Fed to remove “considerable time” from its FOMC statement next week to signal its intentions to hike rates in 2015.”
“Fed Chair Janet Yellen would probably see the glass as half-full rather than half-empty. Both Fed Vice Chairman Stanley Fischer and the White House Council for Economic Adviser Chairman Jason Furman have already conveyed that lower oil prices should be viewed a tax cut for consumers, and hence, net positive for the US economy.”
“In our latest quarterly sent out yesterday, we reckoned the first US rate hike would take place in 4Q15. We have subsequently revised our currency forecasts to reflect a firmer USD next year, as the long end of the yield curve re-anchors itself higher, as witnessed before the first tapering of asset purchases in 2013.”
“We don’t expect the same kind of volatility seen during the Fed taper tantrums because the global economy would need to be in a healthier state before the hike."
Key Quotes
“Given the latest better-than-expected headline US jobs numbers, Fed expectations are different this time around. Speculation has emerged for the Fed to remove “considerable time” from its FOMC statement next week to signal its intentions to hike rates in 2015.”
“Fed Chair Janet Yellen would probably see the glass as half-full rather than half-empty. Both Fed Vice Chairman Stanley Fischer and the White House Council for Economic Adviser Chairman Jason Furman have already conveyed that lower oil prices should be viewed a tax cut for consumers, and hence, net positive for the US economy.”
“In our latest quarterly sent out yesterday, we reckoned the first US rate hike would take place in 4Q15. We have subsequently revised our currency forecasts to reflect a firmer USD next year, as the long end of the yield curve re-anchors itself higher, as witnessed before the first tapering of asset purchases in 2013.”
“We don’t expect the same kind of volatility seen during the Fed taper tantrums because the global economy would need to be in a healthier state before the hike."