4-charts. Dot Plot shows FOMC meeting participants’ assessment of monetary policy. Rate hike odds implied from Fed Fund Futures trading.
Screencaps of rate hike probabilities as well as FOMC Dot Plot taken off CME FedWatch Tool. In addition, a list of 3 meeting outcomes that could qualify as a shock to the market i.e. high impact news.
Price performance based on this chart of SiMSCI shows that the last four weeks, only market sentiment and chart level matters. Did any fundamentals change in 4 weeks? Fear driven correction, then V-shaped rebound absent any meaningful narrative. Time more than even to pay attention to fundamentals.
This is a post-CNY update with a look at CME odds of a March rate hike (83%). Additionally I take a closer look at JP225 and SG30. JP225 is clearly the weaker leg in the correction and their relative performance suggests JP225 has more to lose. For SG30, recall that 399 is a strong level to test.
Chinese New Year is coming so there will be a 1-2 week period where a significant segment of traders go away. Low volume environment could lead to melt-up or melt-down easily (see green zone). Moving average suggest 13-week ema could become potential resistance. Could see pinball action as market fights.
Day after January FOMC (last night), probability of a hike in March is 80.3%. If there is a rate hike in March, the next one will likely happen in June with 58.9% probability. A third hike in 2018 is uncertain; probability of cumulative 75 basis point hike for the whole year is less than 50% at this point.
Odds of a 25 basis point rate hike in March 2018 by the Federal Reserve increased dramatically since minutes of the December ’17 FOMC meeting was released last night.