What will the Fed do in 2017?

Affected by dollar moves

The global rates market has changed fundamentally following the Trump election. Yields of 10-year US treasuries have risen by more than half a percentage point since 8 November.

Market anticipation of a debt-financed fiscal stimulus by the Trump administration already did and will lead to further upward pressure on inflation expectations, and thus also on the Federal Reserve. In this environment, we believe that the Fed has to raise key interest rates by two times in 2017. However, a sharper rise in interest rates is less feasible because the Fed is likely to keep a close eye on the US dollar.  Fed holds rates but nods to further hikes The greenback is currently going through a phase of strength, and parity with the euro is possible in the first half of 20...