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Dot Plot and rate hike odds 36 hours to March 2018 FOMC meeting

I am going to pin these screencaps taken off CME FedWatch tool for record keeping. After the coming meeting (preferably at least 24 hours after), we can come back for a before-after comparison. This is a quick and easy way to ‘check’ if any substantial change comes out of the meeting based on market’s reaction or non-reaction.

Rate hike probabilities taken from CME FedWatch Tool 36 hours before March 2018 FOMC meeting

Rate hike probabilities taken from CME FedWatch Tool 36 hours before March 2018 FOMC meeting

The above table shows 91.6% probability of a 25 basis point rate hike at the moment. This is very close to certainty and therefore ‘expected’ and ‘not surprising’.  Dot Plot below shows FOMC participants’ projection of future rates. With a new chairman on board, this could be a time for change.

In my opinion, there could be three surprise outcomes from this meeting:

  1. No hike comes out of this meeting – only 8.4% probability and  therefore would be a surprise.
  2. 50 basis point or more hike – zero probability at moment and therefore would be quite a shock.
  3. 25 basis point hike which at 91.6% probability is highly expected but in conjunction with a new Dot Plot that paints a lower trajectory for rate growth (lowers probabilities of future hikes).
FOMC Dot Plot captured from CME FedWatch before March 2018 FOMC meeting

FOMC Dot Plot captured from CME FedWatch before March 2018 FOMC meeting | Source: CME

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Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.

“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.

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