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    FOMC points to a September hike – Danske Bank Pablo Piovano

    Analyst Jens Sorensen at Danske Bank keeps the view that the next rate hike by the Fed would be announced at the September meeting.Key Quotes“This week’s attention will be on Wednesday’s FOMC meeting. Since the disappointing May non-farm payroll report markets have significantly re-priced Fed monetary policy and now price less than a 70% probability of a 2016 hike”.“In our view this is too little and although the FOMC is widely expected to leave rates unchanged this week, we think it is more likely than not that the median ‘dots’ (i.e. the expected number of Fed hikes) will be left unchanged at two and four for 2016 and 2017, respectively”.“While markets are unlikely to significantly re-price the short-end of the US curve on this communication alone it would confirm our call for a September hike given our economic projections for the coming months as we think markets have generally turned too negative on the US”.

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