The Fed meeting this week is getting dramatically less attention than September’s did. Following the extremely dovish slant from those minutes and a number of rhetorically dovish statements and speeches from several members of the FOMC, the odds of an October hike collapsed to basically zero. The odds of a December hike are greater than zero, but they remain quite low at 30%.
Of course, those are the independent probabilities of a hike at a given meeting; they aren’t the cumulative odds of a hike by a given date. In that respect, by our calculations the first fully priced hike, or first month where investors feel the odds of a move upward in the Fed’s target band for Fed Funds Effective is 100%, is not until April of 2016, nearly six months away. Unless the FOMC inserts dramatically more hawkish language into its statement this week, it’s increasingly unlikely that we’ll see a hike until Q1 or even possibly Q2 of next year.