Fed: An eternity between now and July – RBC CM

Research Team at RBC Capital Markets, suggests that while recent Fed rhetoric and a surprisingly hawkish set of Minutes for the April meeting have certainly forced implied rate hike probabilities higher throughout the 2016 horizon, we still think it is nearly impossible for the committee to raise rates in June.

Key Quotes

“Additionally, we think a lot of things have to align in order for the Fed to justify a lift at the July confab. September is still complicated by Money Market reform and November (the meeting is on the 2nd) falls right on top of the US Presidential Election. So despite events of recent days, our core view is that the most likely timing for the next hike is December. That being said, we also acknowledge that many committee members seem to now view July as an attractive candidate for raising rates.”