By Mike Dolan LONDON (Reuters) - Markets appear to have batted away next month's Federal Reserve gathering as a paused 'also ran' meeting in favor of ...
STORY CONTINUES BELOW THESE SALTWIRE VIDEOSWatch onLONDON - Markets appear to have batted away next month's Federal Reserve gathering as a paused 'also ran' meeting in favor of second-guessing about a November rate hike - but next month may hold the key to finally unlocking the end of the tightening cycle.
For the first time since the SVB bust and regional bank crisis in early March, futures markets moved briefly this week to show as much as a 60% chance on another policy rate rise to the 5.50-5.75% range by the November 1 Fed meeting. So much so that the Atlanta Fed's real time GDPNow estimate of real, inflation-adjusted U.S. economic growth in the current quarter had accelerated to some 5.9% as of last week - its highest since January last year and some 9% in nominal terms despite more than 500 basis points of Fed tightening in the interim.
And yet the September meeting could still be the 'big reveal' as it sees publication of the Fed's updated 'dot plot' that will likely show just where they then see the cycle crest. And given all this month's bond market angst about 'higher-for-longer' rates, the Fed's existing median assumption of a 130bp drop in policy rate to 4.3% through 2024 may also be revised sharply to show a shallower decline - if any at all.
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