The Fed funds futures, Eurodollar Futures and UST 5Y5Y forward breakeven all suggest the prospect of fewer rate hikes in the year of 2019, although the FOMC anticipated three hikes next year according to the September "dot plot" forecasts, according to the latest research report from Scotiabank.
The Fed has fine-tuned its policy stance amid risks of a synchronized global slowdown. Minneapolis President Neel Kashkari, who has repeatedly called for caution on raising interest rates, said on Tuesday that further tightening could trigger a recession.
Further, President Donald Trump renewed his criticism of the Fed on Tuesday, describing the US central bank as a "problem" as he called for lower interest rates. New York Fed President John Williams said on Monday that the US central bank will stick with its campaign of gradual interest-rate increases, but added that the Fed is not on a pre-set course and will adjust monetary policy to do its best to keep the US economy going strong with low inflation, the report added.
Fed Vice Chairman Richard Clarida said last Friday that the US central bank’s benchmark short-term rate is getting closer to a "neutral" level and should be "data dependent" on more hikes.
Meanwhile, the US ISM manufacturing index fell to a six-month low in October, raising concern over a synchronized global slowdown. Data also showed cooling factory activity in the EU and China. In addition, falling Baltic Dry Index, official manufacturing PMI and PPI inflation confirmed that China’s economy is losing steam.


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