Christopher Caparelli, CFA
Managing Partner
In testimony before the House Financial Services Committee on November 4, Federal Reserve Chairwoman Janet Yellen remarked that a rate hike was still a “live possibility” in December, should economic data remain supportive. Prior to that comment, the market was unsure of any policy change at the Fed’s December meeting, with the Fed Fund’s Futures market implying a 50% probability of a rake hike. After Yellen’s comments, the probability of a hike in December jumped to nearly 70%, and currently sits at 80%, thanks to strong payroll reports over the last two months and further hawkish comments from FOMC members.
Despite this guesswork, Yellen and other members of the FOMC have stressed that the timing of the first rate hike in over nine years is less important that the pace of successive increases. While the futures market hasn’t been an overly reliable predictor of the future path of the Fed Funds rate, it is worth noting that the market appears to accept the Fed’s pledge to enact future increases in a slow and steady manner. Assuming a 0.25% increase on December 16 as a near certainty, the futures market doesn’t imply any meaningful probability of the next increase until the March 2016 meeting, with the most likely landing spot of the Fed Funds rate to be between 0.75% and 1.00% at the end of 2016. While a Fed Funds rate of 1.00% would be a notable shift from the Fed’s post-crisis zero interest rate policy, it would still be seen as highly accommodative in a historical context, and supportive of future economic growth.
The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.
05.12.2025
As a result of policy uncertainty, shifting sentiment, and a potential U.S. economic slowdown, the dollar has moved lower in…
05.07.2025
The aging population in the United States has garnered increasing attention over the past two decades, coinciding with the retirement…
04.29.2025
This week’s chart shows two indices created by Morgan Stanley that seek to track the performance of companies with different…
04.28.2025
Since the onset of the pandemic, the commercial real estate market has experienced significant volatility — first benefiting from a…
04.23.2025
According to the most recent Bank of America Global Fund Manager Survey, gold has surged to the top of the…
04.17.2025
This video is a recording of a live webinar held April 16 by Marquette’s research team analyzing the first quarter…
Research alerts keep you updated on our latest research publications. Simply enter your contact information, choose the research alerts you would like to receive and click Subscribe. Alerts will be sent as research is published.
We respect your privacy. We will never share or sell your information.
If you have questions or need further information, please contact us directly and we will respond to your inquiry within 24 hours.
Contact Us >