Markets are still dealing with the Jackson Hole hangover, after both Fed chair Janet Yellen and Vice Chair Fisher delivered hawkish comments Friday.
(Side note: here are the best hangover cures -- courtesy of Health.com...)
Based on CME’s FedWatch Tool, markets are now pricing in a 27% chance of a rate hike in September, 33% chance in November and a 58.6% chance in December.
And, according to analysts at BNP Paribas, expectations are likely to rise even further.
“[R]ate markets continue to price less than 50% odds of a rate hike in September, likely wary that data in the week ahead will once again undercut the case for tightening,” they said in a report Monday. “However, we expect the data will actually reinforce rate hike expectations.”
All eyes will be on Friday’s nonfarm payrolls data, which BNP expects will be “robust.”
“Our economists expect Friday’s employment report to show robust payroll growth of 215k, which will put 3m average job growth at a powerful pace of 254k.”
Meanwhile, consensus forecasts are calling for a rise of 186k jobs last month.
BNP's Global Economics team also had some comments - see below:
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