Mood shift part 2

We are looking at increase in expectation of Fed rate hikes this year 2019 versus just last week based on CME Fedwatch Tool. Just last week market was looking at virtually no hike and odds of a rate cut but now we are back in 2-hikes territory.

There were times when there was scant movement on the CME Fedwatch Tool over weeks but now within the space of two days the numbers in the green column (odds of the next 25 basis points hike) doubled. Was there any news I missed? Actual numbers are not as interesting as the swing in mood and rate of change. Compare green columns and ignore the rest. Screencap taken today is the one of the right. Left was taken 2 days ago.

CME Fedwatch Tool screencap 16 January 2019

CME Fedwatch Tool screencap 16 January 2019 (right) and the one taken on 14 January (left)

Then check out the screencap↓ taken on 07 January. See the swing from odds of virtually no hike this year to the current numbers. Something changed.

CME Fedwatch Tool screencap taken 07 January 2019

No more Fed hikes, rising odds of rate cut in second half ’19?

Could affect USD, oil, gold and stock markets.

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