For the week starting Monday October 31, 2016
It might be apropos that the Fed makes a change in the rated just 6 days away from the election. After all, this has been quite a surprise filled US election. However, the best we might expect is if the Fed were to telegraph a hike in December although this is not expected either (the chance of a surprise hike is 17%). The meeting before the December meeting last year did not telegraph explicitly that a December hike was forthcoming. Seeing that this meeting is just a statement (no dot plot, no press conference scheduled), the vote might be the most important part of the statement. We know at the last meeting there were 7 members in favor of no change while 3 were against. Although there have been a lot of members saying "get on with it", their goal may have been to get "the market" to price in some probability that something might happen. That way if they do tighten, it would not be a shock. The probability of a hike for December is around 70% and we know that yields on the treasury curve have also been rising. So although not at 100%, the Fed is getting closer to convincing the market/the world that the one a year December holiday present might be just around the corner.