The Fed dropped a bomb this past Wednesday when it released the latest FOMC minutes—a rate hike in June is possible. Weak US growth in the first quarter of the year and a slowdown now, coupled with nonfarm growth below 200K jobs might have suggested a more tamed statement. Markets responded to the surprise with a selloff in Treasuries and equities and a surge in the Dollar. And yet, despite the explicit mention of June, a rate hike in September seems more likely.
Just like the December 2015 rate hike, the Fed softens the blow by throwing out the possibility of a rate hike before the conditions are actually ripe for one. By the time the Fed actually lifts rates, the money market and the bond markets have adjusted and the shock is minimal. Continue reading "Impact Of Fed Rate Hike: June vs. September"
