Fed Rate Cut – Target Probabilities at the Fed’s FOMC Sept. 18 Meeting Today, traders see a 61.2% probability of a 25-bps rate cut at the Fed’s FOMC September 18 meeting. Picture source: CME Group
Before the Next FOMC Meeting, the Fed Funds Market Is Pretty Accurate Probability of a Fed rate cut on July 31, 2019: 100% (Fed funds market expectation). Picture source: Bianco Research
The Fed Funds Market Is Rarely Wrong About the Next FOMC Meeting Seven days before a FOMC meeting, the market has been accurate 95% of the time since 1994. Picture source: Bianco Research
The Market Has Correctly Called Each Fed Rate Decision since 2010 And since 1994, seven days before a FOMC meeting, the market has been accurate 95% of the time. You may also like “The Fed Funds Market Is Rarely Wrong About the Next FOMC Meeting.” Picture source: Deutsche Bank
Most Important Variables Explaining the S&P 500’s YoY Return Today, the two most important variables explaining the S&P 500’s YoY return: FOMC rate change and U.S. hard economic data. Picture source: Arbor Research & Trading LLC
The U.S. Unemployment Rate Is Historically Low But the FOMC projection suggests that the unemployment rate cannot improve indefinitely. Picture source: Federal Reserve Bank of Richmond
What About the Predictive Power of the Fed? As former Fed policymaker Narayana Kocherlakota said in 2016: “Don’t rely on FOMC forecasts of future fed funds rates.” Why? Because the economy is often shaken by crises and does not evolve as expected. Picture source: Hedgeye Risk Management LLC
