“Dovish” Fed Expectations Collapse To Lowest Since 2015

Jon Alternative Media, Banking, Blogosphere, Economy, Fiscal Policies, Market Commentary

Back in the middle of February – during the height of the financial-market turmoil, the market was pricing in a shockingly policy-error-ish 36.5% chance of a rate cut in 2016. Since then The Fed has done everything it can to try and regain credibility – attempting to be hawkish in the face of dismal data, baffling everone with bullshit, and droning on about data-dependence. Now, thanks to the FOMC Minutes released last week with officials suggesting investors may be underestimating the pace of tightening, the odds of a 2016 rate cut have collapsed to just 4.8% – its lowest since New Year’s Eve.
As Bloomberg details in the chart below, the probability of the Federal Reserve cutting U. S. interest rates in 2016 has fallen below 5 percent for the first time since New Year’s Eve, according to options on eurodollar futures contracts.

This post was published at Zero Hedge on 05/25/2016.