Investment decisions in global markets in the coming months will depend on the forecasts that are made about the Fed’s next moves.
The more cautious experts are recalling that the U.S. central bank maintains its gradual withdrawal of monthly debt purchases (quantitative easing) and that Yellen has not changed his pro expansive monetary policy speech. The boldest analysts are considering the strength of the US economy, with some job creation data in the last month –more than expected- and a slightly higher inflation, to conclude that an advancement of the rate hike may be fully justified.
Other arguments that play in favor of an advancement is the long time that rates have been at 0% or below that threshold. It’s been almost six years since the fall of Lehman Brothers, and many wonder if the time for normalization of monetary conditions has come.
In response to solid figures for job creation, Fed funds futures for September 2015 have risen these days to stand at 0.55% compared to 0.38% at the end of May. By December 2015, futures mark 0.79% rates and in December 2016, 1.82%.
However, the market says rates are still below the Fed forecasts: 1.13% by end of 2015 and 2.5% before the end of 2016.
The possible advancement of the rate hike in the United States is particularly concerning investors who bet on emerging markets. The recovery of those assets in the first part of the year has been supported by loose monetary conditions, making it necessary for investors to look for markets that offer more profitability, although they bear higher risk. In fact, fixed-income, emerging assets are virtually the only attractive alternative, according to analysts of Afi.