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Markets brace for Fed - more hikes ahead?

Wednesday, March 15, 2017 - 01:50

Markets focused on what is expected to be a third rise in U.S. interest rates since the financial crisis later on Wednesday, while in Europe the Dutch election got underway, starting a period of political uncertainty for the EU. David Pollard reports

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Markets focused on what is expected to be a third rise in U.S. interest rates since the financial crisis later on Wednesday, while in Europe the Dutch election got underway, starting a period of political uncertainty for the EU. David Pollard reports Rate hikes: stock markets don't generally like them. But this time around just a few last-minute nerves - Europe's shares virtually flat in what traders called a 'sideways dance'. The view almost unanimous on the strength of the US economy - and what it means for the Fed. SOUNDBITE (English) CHIEF ECONOMIST, WORLD FIRST, JEREMY COOK, SAYING: "Unemployment is down close to record levels .... We're starting to see wage pressures begin to build. So this is an economy where rate hikes should be occurring." (SOUNDBITE) (English) BGC PARTNERS MARKET STRATEGIST, MIKE INGRAM, SAYING: "The market is already discounting about two and half quarter point rate rises at the moment through the Fed fund futures. So we're nearly there." The focus - already not so much this meeting - but what could happen after. SOUNDBITE (English) SENIOR FX STRATEGIST, RABOBANK, JANE FOLEY, SAYING: "The market is trying to work out whether or not a March interest rate hike will be followed by a move in June." SOUNDBITE (English) CHIEF ECONOMIST, WORLD FIRST, JEREMY COOK, SAYING: "We'll probably see one in September. The upside bias however is that we will see a third one probably in December. But we need to see more continuation of plans from Pennsylvania Avenue." A big freeze hitting the avenue itself - with nobody spared. After years of the Fed flagging hikes and then not delivering, traders see a massive fiscal boost from Donald Trump as - possibly - tipping the balance towards the hawks. As a 2.5 per cent inflation rate goes even further beyond the Fed's target. (SOUNDBITE) (English) BGC PARTNERS MARKET STRATEGIST, MIKE INGRAM, SAYING: "This year, I think, is different, next year significantly, because it's not in the market, and I suspect if the equity market is not completely wrong, that 2019 may be different as well." (SOUNDBITE) (English) HEAD OF CORPORATE DEVELOPMENT, 7IM, JUSTIN URQUHART STEWART, SAYING: "Is it going to effect a negative on the global economy? I don't think so. There's still an awful lot of strength domestically, and you're still seeing that strength elsewhere in the world." As in Europe - where the day's Dutch vote kicks off a round of major elections that could give markets something very different to worry about.

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Markets brace for Fed - more hikes ahead?

Wednesday, March 15, 2017 - 01:50