Here's What Matters on Fed Day, Part 2

Abstract

Sadly, for the market's purposes, it's less about the needless loss of life and more about the impact on commodities prices and supply chains. If markets were ultra concerned about the latter, we likely would have seen oil prices do something other than simply moved back up to yesterday morning's highs. We're market watchers and not a global military strategists, so we don't know what we don't know-only that the market isn't looking too concerned by the latest batch of rhetoric. Rather, the market's primary concern has been and will continue to be today's Fed events. These are as follows: The announcement itself has one key component: the rate hike decision. Markets price the probability of 100bps at just under 20%, but we expect the Fed to give it more than 20% of its consideration, even if they ultimately side with the market consensus. The rate hike will probably not be the key determination for bonds.