Goldman’s Hatzius: 35% chance of Fed hike in March and markets aren’t braced for it

Goldman’s Hatzius: 35% chance of Fed hike in March and markets aren’t braced for it
  1. Goldman’s Hatzius: 35% chance of Fed hike in March and markets aren’t braced for it
    The Federal Reserve could raise interest rates as much as four times this year, going beyond what is currently expected by most investors, Goldman Sachs’s chief economist Jan Hatzius says. …

The Federal Reserve could raise interest rates as many as four times this year, going beyond what is currently expected by most investors, Goldman Sachs’s chief economist Jan Hatzius said on Monday.

Speaking at a conference in London, Hatzius said there’s a 35% chance of a rate hike in December, placing a higher probability of an imminent increase than the broader market. According to the CME FedWatch tool, Fed fund futures are currently pricing in a 24% chance of rate jump in March.

“We are seeing upward pressure on wage growth, upward pressure on core inflation. We expect further monetary policy normalization from the Federal Reserve to a degree that goes beyond what is priced into the bond market,” Goldman’s chief economist said.

“So for 2017 we’re looking for three hikes from the Fed as a baseline. In June, in September and December. There is some possibility, 35%, for a March hike,” he said.

See also: Goldman Sachs’s chief economist warns of 3 key risks in 2017

The Fed raised interest rates in December for the second time in a decade and penciled in three moves this year. The next rate rise is now seen in June, according to the CME FedWatch tool. However, after the strong wage growth seen in the December jobs report out on Friday economists are increasingly seeing a March hike as a possibility too.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, for example, said on Friday he thinks rates will rise again as soon as March, provided there is some clarification of President-elect Donald Trump’s fiscal policy program by then.

Looking further ahead, Hatzius said the market is too slow at pricing in the speed of rate hikes.

“As we go into 2019-2020, when most people predict the end of the rate hike cycle, we’re forecasting 3.5%, whereas the market is priced for only 2%. We are generally ahead of the market as far as interest rates are concerned,” he said.

Goldman Sachs

Boston Fed President Eric Rosengren said on Monday said that …

  1. Secular Shift in Interest Rates? - Finance
    01.19 / 18:58
    When the cost of money changes, everything changes. Interest rates affect every aspect of the financial universe. At the global level, they impact currency and trade flows between nations. At the national level, they affect the discounted... …
  2. Donald Trump, Betsy DeVos and School Choice - Finance
    01.19 / 18:58
    Donald Trump’s nominee for secretary of education, Michigan billionaire Betsy DeVos, was questioned on a range of education issues during her confirmation hearing this week. Central to the debate is her major role in supporting... …
  3. Twitter Storms and Trade Wars - Finance
    01.19 / 18:57
    The number of followers on US President Donald Trump’s Twitter page is increasing at an exponential rate, reaching 20.3-million this week, and up from around 19.9-million just a few weeks ago. Mr Trump’s frequent use of... …
  4. Tesla’s Elon Musk praises report that closed Autopilot investigation - Finance
    01.19 / 18:48
    Federal regulators close investigation on May fatal crash involving a Model S on Autopilot, Tesla’s suite of advanced driver assistance systems. No recall is to be issued.  …
  5. California home price ends year on high note while sales moderate in December; housing market posts solid performance in - Finance
    01.19 / 18:36
    LOS ANGELES, Jan. 19, 2017 /PRNewswire-USNewswire/ -- Despite strong headwinds of tight housing supplies and an affordability squeeze throughout much of 2016, California's housing market ended the year on a positive note, posting a moderate sales pace and home price increases in December, the …
  6. Hong Kong Racing: Hong Kong Classic Mile - Finance
    01.19 / 18:33
    By David Morgan at the HKJC Pakistan Star the local celebrity gelding by Sharmadal and the John Moore stable’s Rapper Dragon, Beauty Generation and Eagle Way will carry the heaviest weight of expectation into Sunday’s (22 January) Hong Kong Classic Mile, but just off-radar, Nash Rawiller is anticipating something exciting from Aussie Seasons Bloom. “I’ve […] The post Hong Kong Racing: Hong Kong Classic Mile appeared first on Live Trading News…
  7. Washington unemployment rate drops to 5.2 percent in December - Finance
    01.19 / 18:19
    Washington’s unemployment rate inched lower in December, driven by gains in leisure and hospitality, information and retail trade s…
  8. Concho Resources Inc. (CXO) to Post FY2016 Earnings of $0.45 Per Share, Jefferies Group Forecasts - Finance
    01.19 / 18:13
    Concho Resources Inc. (NYSE:CXO) – Analysts at Jefferies Group issued their FY2016 EPS estimates for shares of Concho Resources in a research note issued on Tuesday. Jefferies Group analyst M. Hsu expects that the firm will post earnings per share of $0.45 for the year. Jefferies Group has a “Hold” rating and a $149.00 price…
  9. Analysts Issue Forecasts for Carrizo Oil & Gas Inc.’s FY2016 Earnings (CRZO) - Finance
    01.19 / 18:12
    Carrizo Oil & Gas Inc. (NASDAQ:CRZO) – Jefferies Group issued their FY2016 earnings per share estimates for shares of Carrizo Oil & Gas in a note issued to investors on Tuesday. Jefferies Group analyst M. Hsu anticipates that the brokerage will earn $1.03 per share for the year. Jefferies Group has a “Buy” rating and…
  10. Market Extra: Trump inauguration set to unleash cascade of stock-market anxiety - Finance
    01.19 / 18:11
    The day of reckoning for the Wall Street is nearly upon us. Donald Trump is set to be sworn in as leader of the free world and the level of consternation in the market is palpable. …
  11. Will NVIDIA Corporation's Smart Home Plans Take Off? - Headlines
    01.19 / 18:10
    Will the chipmaker’s tiny smart speaker be overshadowed by similar devices from Amazon and G…
  12. Tesla Motors Upgraded: 3 Things You Need to Know - Headlines
    01.19 / 18:09
    Morgan Stanley puts a price tag on Tesla shares: About $0.50 per 1,000 cars…
  13. Universal Music Group And Alex Da Kid Sign Multi-Faceted Agreement - Finance
    01.19 / 18:00
    SANTA MONICA, Calif., Jan. 19, 2017 /PRNewswire/ -- Universal Music Group (UMG), the world leader in music-based entertainment, today announced a multi-faceted agreement with Emmy-winning, critically acclaimed music producer and CEO/Founder of KIDinaKORNER, Alex Da Kid. Under the agreement,…
  14. NX Prenatal Appoints Leading Experts to Medical/Clinical Advisory Board - Finance
    01.19 / 17:59
    LOUISVILLE, Ky. and HOUSTON, Jan. 19, 2017 /PRNewswire/ -- NX Prenatal Inc. ("NX Prenatal") today announced the formation of its Medical/Clinical Advisory Board.  This new board brings together leading clinicians and industry veterans who enhance the range and depth of expertise of the …
  15. Everspin Names Patrick Patla Senior Vice President of Marketing - Finance
    01.19 / 17:55
    Everspin Technologies, Inc., the world's leading developer and manufacturer of discrete and embedded MRAM, today announced the appointment of Patrick Patla as Senior Vice President of Marketing. Mr. Patla will be responsible for driving the strategic direction for Everspin and leading the marketing effort to drive growth across the business. He will establish Everspin product roadmaps and manage the development and execution of global marketing…
  16. AG Healy Speaks Out Against Trump EPA Admin Pick - Finance
    01.19 / 17:44
    Massachusetts Attorney General Maura Healey has joined a coalition of nine attorneys general in urging the Senate Environment and Public Works Committee to oppose the confirmation of Oklahoma Attorney General Scott Pruitt as Administrator of the Environmental Protection Agency (EPA), calling him “manifestly unsuited for the r…
  17. Brookline Inside Trader Sentenced To Prison, Fined For Million-Dollar Scheme - Finance
    01.19 / 17:43
    A Brookline man was sentenced yesterday for his role in a million-dollar insider trading scheme in 2013 during the lead up to the acquisition of Cooper Tire & Rubber Co. by India-based Apollo…
  18. Why Rent-A-Center, Inc. Stock Tumbled Today - Headlines
    01.19 / 17:32
    The rent-to-own chain posted a disappointing preliminary earnings report as it continues to struggle with technical…
  19. Casio To Introduce New Electronic Musical Instruments At Winter NAMM 2017 - Finance
    01.19 / 17:25
    ANAHEIM, Calif., Jan. 19, 2017 /PRNewswire/ -- Today, Casio America, Inc., is striking a chord with music enthusiasts and professional musicians alike with the launch of seven new digital keyboards and pianos, as well as a new app. Casio's advanced electronic musical instruments including the …
  20. Burt's Bees Brings Late Founder's Cabin To Durham To Honor His Way Of Life - Finance
    01.19 / 17:24
    DURHAM, N.C., Jan. 19, 2017 /PRNewswire/ -- On January 19th, Burt's Bees will unveil the iconic cabin of late co-founder Burt Shavitz, commemorating the photojournalist-turned-beekeepers' quiet, uncomplicated life in nature. The maker of natural personal care products for over 30 …