Oct 29, 201510:29 AMOpen Mic
Send us your blog for consideration!
We have Fed lift-off? Not so fast
This week, the U.S. Federal Reserve was widely expected to leave interest rates unchanged at the conclusion of its meeting. While market-based estimates of Fed lift-off point to low odds of a rate increase this year, we, along with many economists, expect the Fed to raise rates at its December meeting. The key will be for economic data to generally improve.
A contributing factor would be rising wages in this week’s third quarter Employment Cost Index report. Beyond this week, we would look to an uptick in inflation data next month and solid employment reports for October and November.
The U.S. political front also remains an important factor in Fed lift-off. If Congress fails to lift the debt ceiling and fund the government in a timely manner, market dislocation could delay lift-off. We believe the likelihood is low that the U.S. government will fail to raise the debt ceiling or pass a budget.
Easy monetary policy continues to be the main feature of the rebound in the global equity markets. European Central Bank President Mario Draghi indicated the central bank is likely to expand its quantitative easing program in December. Also, ahead of this week’s annual central party meeting, authorities in China reduced interest rates to support economic activity.
For more information, please go to: https://reserve.usbank.com/insights/market-economic-update.
Robert L. Haworth, CFA, is a senior investment strategist and Darrell Behnke is the Madison market leader for the Private Client Reserve of U.S. Bank.
This information represents the opinion of U.S. Bank and is not intended to be a forecast of future events or guarantee of future results. It is not intended to provide specific advice or to be construed as an offering of securities or recommendation to invest. Not for use as a primary basis of investment decisions. Not to be construed to meet the needs of any particular investor. Not a representation or solicitation or an offer to sell/buy any security. Investors should consult with their investment professional for advice concerning their particular situation. The factual information provided has been obtained from sources believed to be reliable, but is not guaranteed as to accuracy or completeness. The organizations mentioned in this publication are not affiliates or associated with U.S. Bank in any way.
Past performance is no guarantee of future results. All performance data, while deemed obtained from reliable sources, are not guaranteed for accuracy. Indexes shown are unmanaged and are not available for investment.
Click here to sign up for the free IB ezine – your twice-weekly resource for local business news, analysis, voices, and the names you need to know. If you are not already a subscriber to In Business magazine, be sure to sign up for our monthly print edition here.