Wall Street’s Primary Dealers Split on Fed Rate Hike

Wall Street’s Primary Dealers Split on Fed Rate Hike

Wall Street’s Primary Dealers Split on Fed Rate Hike


Some top Wall Street bankers now expect the Fed to raise US interest rates later this year after a strong July NFPs report suggested a modest economic pick up in 2-H following an anemic 1-H of Y 2016 a Reuters poll Friday showed.

12 of the 21 primary Treasury dealers, or firms that do business directly with the Fed, said the US central bank would raise its target interest rate by a quarter percentage point by the end of this year.

3 of the banks polled said the Fed would raise rates at its 20-21 September FOMC meeting, a  shift from a month ago when none thought the Fed would make such a move.

The government’s US payrolls report beat expectations for the 2nd month running and showed employers added 255,000 workers in July with a so 0.3% rise in wages.

There is still anxiety over the fallout from Britain’s vote to leave EU on 23 June, and a renewed weakness in the energy market may keep the Fed from following up with another rate increase.

The median view among 13 banks placed a 50% chance the Fed would raise rates at its December meeting.

The July jobs report did not lower primary dealers’ forecast of a 20% chance of a US recession in the next 12 months from the 8 July poll.

The respondents were divided whether the upcoming US Presidential election on 8 November would deter Fed policymakers from raising rates before then.

Friday, the US major stock market indexes finished at: DJIA +191.48 at 18543.53, NAS Comp +54.87 at 5221.12, S&P 500 +18.62 at 2182.87

Volume: Trade was moderate with 842-M/shares exchanged on the NYSE.

  • Russell 2000 +8.3% YTD
  • S&P 500 +6.8% YTD
  • DJIA +6.4% YTD
  • NAS Comp +4.3% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.38) Bullish (0.30) Very Bullish (0.50) Bullish (0.33)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Bullish (0.30) Neutral (0.24) Bullish (0.33) Bullish (0.33)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Bullish (0.26) Neutral (0.23) Bullish (0.44) Neutral (0.11)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.30) Bearish (-0.29) Bearish (-0.32) Bearish (-0.29)

Have a terrific weekend.



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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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