Best Bet for Rate Hike
04/27/2015 12:01 am EST
The recent Bloomberg survey of economists, says MoneyShow's Jim Jubak, indicates that 71% are now looking for a rate hike in September.
We've seen a huge shift in the last month in expectations for when the Fed's first interest rate increase is going to happen.
Bloomberg does a survey of economists once a month and, in March, the thought, the expectation, a plurality of economists, about 45%, thought that the first rate cut was going to come in June.
That's dropped in the next survey, the April survey, down to 12%. June is now pretty much off the table, 45% to 12% as far as economists are concerned. July never had a whole lot of backing. It's the summer. You don't get big changes in policy in the summer is the thought and, so, what we saw is, in the March survey, about 12% of economists thought the first increase would come in July. That fell to 5% in the April survey.
That's really not an issue.
The big winner, of course, is September where you're seeing, now, in the most recent survey, about 71% of economists saying the first rate increase is coming in September. That's up from a 32% rating a month earlier in March so, right now, everybody is expecting September and, if you're thinking about how this effects the markets, the issue is are we going to move September.
I don't think we're going to move September closer. I don't think we're going to move September. September is going to lose backing and we're going to move to July.
In fact, the economy continues to provide just enough weak data, a pretty big increase in initial claims in the middle of April, provide enough data to suggest that it's weak enough so that the Fed might not move, so I think the question is whether we move from September to say December or to sometime in 2016.
I think that's likely but watch the Bloomberg survey to see whether we go from September to something later and that would, of course, just encourage the stock market.