Fed Rate Hike Pace in Focus After First Rise

The Federal Reserve is 99% likely to raise interest rates Wednesday for the first time in years.

That’s almost a sideshow. What Wall Street will really be watching for are hints about what’s coming in 2016.

How many more times is the Fed going to raise rates?

Investors around the world will be counting how often the word “gradual” (or something like it) is used in the official Fed statement that comes out at 2 p.m. and then at Janet Yellen’s 2:30 p.m. press conference.

“I think Janet Yellen will give us one of the most dovish press conference ever,” says Ed Yardeni, president and chief investment strategist of Yardeni Research.
The message is likely to be: Yes, we raised interest rates today, but we will be very slow and cautious going forward.

Expectations were already high for Yellen to stress that the Fed would “go slow” in 2016, but investors are even more anxious after the junk bond market scare in recent days. A big junk bond mutual fund called Third Avenue blew up last week.

Investors want to hear that the Fed is watching these alarming developments and will react to prevent another crisis.

via CNN

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza