MBS Day Ahead: Calm Calendar Ahead of Friday’s Fed Speeches


Posted To: MBS Commentary

In addition to ISM Non-Manufacturing, tomorrow brings multiple Fed speeches, including Yellen and Vice Chair Fischer in the early afternoon. It’s exceedingly possible that markets may use the tone of these speeches to cast their final vote one the likelihood of a March rate hike. I’ll just go ahead and tell you right now, the Fed will hike in 2 weeks unless something big happens. The scenario is similar to Sept 2015, when the Fed looked highly likely to hike. But in the days leading up to the meeting, China’s stock market was free-falling through the lowest levels in more than a year. The Fed held off for that reason and they even mentioned it in the Minutes. As the chart shows, markets have already priced in nearly as much of a hike as they did before the last 2 hikes. In a way, that’s good…(read more)

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