Futures: Chances of a June / July Rate Hike Surge Most in 3 Months

Join our Larry McDonald on CNBC’s Fast Money, Wednesday May 18, at 5pm.

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“The risk-reward in betting on Fed action in the July – September time frame is the most attractive in three months. Global credit and economic risks shot the March and June rate hikes right between the eyes, took the steering wheel out of Janet’s hands. This will position the Fed to start signaling for a July hike, sometime in the next 45 days. That would be a dollar positive; gold / commodities / EM negative. She’ll likely try and get back in the driver’s seat. In recent years, the rebound in Q2 vs Q1 GDP has been meaningful, north of positive 1%.”

The Bear Traps Report; May 2, 2016


As you can see in the quote above, earlier this month we emphasized that long dollar position trades should benefit from a hawkish shift from the Fed.

We’re happy that the Fed Funds Futures for July have moved from 14 to 24% over the last week.

The U.S. Treasury curve is the flattest since 2007. The 2-year has gone from 68 to 80 bps over the last few weeks. The market is starting to price in July Fed action.

Pick up our latest Bear Traps Report here.

WIRP June 2
US Dollar Ripping

DXY hit $94.70 today up from below $92 earlier this month.

The next President of the United States is going to have an enormous impact on the Federal Reserve as Fed Chair Yellen’s term ends in 2018.

Pick up our latest Bear Traps Report here.