GS: Fed Hike Monitor

From the FXWW Chatroom: => Dec probability 74% – ahead of the US election, the market is pricing in a slightly lower chance of a December hike from last week. Currently priced at 74%, this is the lowest implied probability of a December hike in the past 2 weeks. Historically the Fed has not hiked without the market pricing in 50% prior to the meeting.

=> Forward curve – the OIS curve is currently pricing in 18bps of hikes for the rest of 2016, and another 16bps for 2017.

=> 1% by EOY 2017 – the market implied probability of the Fed reaching 1% by the end of 2017 is 26%, 5% lower week over week. This is equivalent to 3 more hikes.

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