When Will The Fed Raise Rates ?

We think that the Federal Reserve will eventually raise its rates by the end of the first semester of 2015, but the market is still not sure about it

(original publishing date: 12/26/14)

If you ask us when the Fed will raise its rates, our answer will be very clear: Spring 2015.

If you take a look at what the market thinks, however, this answer looks less clear: the market believes nothing will happen in the first semester of 2015.

Check this out:

We know funds rates are now between 0.00% and 0.25%.

We can therefore say that any movement above 0.25% can be considered as a market expectation for a rates increase.

As of today, it seems the Fed will raise its rates by the end of Summer/beginning of Autumn.

This is what the market thinks now, but keep in mind that market sentiment can shift very quickly, and this is why we’re still betting on the first semester (probably Q2) of 2015.