The Weekly Brief (14 December 2015) - J.P. Morgan Asset Management

The Weekly Brief (14 December 2015)

Contributor Global Markets Insights Strategy Team

After 7 years with US interest rates at the zero lower bound we expect the Fed to increase interest rates by 0.25% on Wednesday.

With unemployment now at only 5% and job creation running at over 200k a month the Fed seem keen to start raising rates. That said, we expect the increase to come with plenty of assurance that rates are likely to only go up gradually. The market is ready for this move, with close to an 80% probability of a December rise priced into markets already. Historically, equity markets have initially fallen slightly following the first rate increase and then recovered to new highs. Whatever the initial reaction, we think the market will soon come to view this as a sign of the strength of the US

Going up
Market implied probability of a 0.25% increase in US interest rates in December


Source: Fed funds futures, Bloomberg, J.P. Morgan Asset Management; data as of 10 December 2015.

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Please be aware that this material is for information purposes only. Any forecasts, figures, opinions, statements of financial market trends or investment techniques and strategies expressed are, unless otherwise stated, J.P. Morgan Asset Management’s own at the date of this document. They are considered to be reliable at the time of writing, may not necessarily be all-inclusive and are not guaranteed as to accuracy. They may be subject to change without reference or notification to you. JPMorgan Asset Management Marketing Limited accepts no legal responsibility or liability for any matter or opinion expressed in this material.

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The Weekly Brief (14 December 2015)