Rate-Hike Odds Are Plunging - March 2016 Now A 'Coin-Toss"

Tyler Durden's picture

If the aim of The Fed's communication strategy was to convince the market that rates will not rise for a very long time... then they have been successful. Just as Goldman Sachs forecast, a US rate-hike is now extremely unlikely before March 2016 and falling fast.

October is "NOT" a live meeting...


In fact, all of the major regions are seeing the market's implied number of months until a rate-hike rising rapidly.



Charts: Bloomberg

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JustObserving's picture

Rates will never rise.  $210 trillion in US debt ensures that.

No rate normalization during my lifetime Bernanke

wolfnipplechips's picture

Zero % chance in a presidential election year. But, right, never is the correct answer.

two hoots's picture

Time to stop these injections that just stop the pain and find a cure.......as the dealer gets richer.

cougar_w's picture


And they will NIRP like mad men. And empty the pension funds. And cut taxes to stimulate buying. And give every school child an EBT card good at any fast food chain.

There are about 100+ things they could do, the list is really long. And they will do them all and eventually Janet will run down the middle of Wall Street tossing bundles of Benjamins into the crowd.

Anyone doesn't get how this all ends simply does not get it and isn't going to.

mtndds's picture

And those phuckers at the Federal Reseve are saying they want to raise rates by the end of 2015 year!!  BWAHAHAAHAHA!!  Damn idiots.

cougar_w's picture

Why would you accuse them of being idiots? They've pranked the entire civilized world to this point. Without doubt we have been witness to the largest transfer of wealth seen in the entire history of our entire species on Earth.


You could call them a lot of things but "idiot" would not even make the list.

LawsofPhysics's picture

Yes cougar. Unfortunately the supply lines are already under considerable stress, so is the "middle" politically speaking.  Neither will hold much longer.

hedge accordingly.

cougar_w's picture

It's true. But I'm not certain anything will ever break in a recognizable sense. I can only imagine that eventually people get tired of waiting for the world to end and then instead go about creating a livable situation for themselves, whatever that means to them at the time and place. Probably meaning, how things were done for the 8,000 years before "finances" showed up and started fucking us all in the ass. And when people just figure out another way that doesn't involve continuous ass rape, guess what -- that world would have suddenly ended. Nobody will even notice nor care. It will just be gone. Bad dream over, time to wake up, new day, I think I'll go tend the garden. Maybe I'll tend the garden until the heat death of the universe.


"LONG AGO I READ A STORY FROM ANOTHER TIMELINE about a character named Candide. He also survived a harrowing series of misadventures and tragedies, then settled on a farm near Constantinople. Listening to a philosophical rant, Candide replied, “That is all very well, but now we must tend our garden.”"

RUSH / Clockwork Angels / The Garden - Live in Dallas 2012


Pool Shark's picture



Here are the projected odds of a Fed Rate Hike by year:

2016: 0%

2017: 0%

2018: 0%

2019: 0%

2020: 0%

2021: 0%

2022: 0%

2023: 0%



Any questions?...





Dazman's picture

So, you're saying there's a chance!!!!!!

Rainman's picture

As much chance as Japan getting off zero in 2020


bunnyswanson's picture


Aaron Neville Tell It like It Is

Goal of Predatory Lending:  Kill the customer.

LawsofPhysics's picture

Any questions?...

Yes, these are effectively the rate on the FRN, so how long before everyone stops using that debt instrument?

Pool Shark's picture



The problem with modern currencies is;... they're ALL debt instruments.

US$ is just the best looking horse at the glue factory...


Jlasoon's picture

Those were some amazing retail numbers this morning. Time to go beg China for some more money. Going to need it to pay for free healthcare for everyone, free college tuition for everyone including illegals, free maternity leave for all the prego women of the world...

cougar_w's picture

Everything you just mentioned would amount to maybe 3% of the US Federal budget. Most of what we pay for is either war ($1T/year) or interest on the national debt.

Jlasoon's picture

You think free healthcare to $300M + would be less than 3% of the federal budget? 

cougar_w's picture

Government doesn't pay for healthcare for 300M+ because it is expensive, as you observe. Healthcare is expensive only because it is a privately run protection racket, and we 300M+ are the marks. If the government ever had to pay for this the price would drop by 1000x -- two Tylenol would cost five cents again instead of $55 -- and then yes it would all easily fit into 3% of the total budget.

Which is why it will never happen.

People don't understand how badly we have been tooled.

Jlasoon's picture

What are you arguing for? Countries like Canada can't even afford to pay nurses, they invent new positions every other year (Sub-Supplemental Nurses). Both my wife and I have worked under the Canadian system and we sure as hell wouldn't go back. What a fucking mess. Let me just put it this way. NO American would accept Canadian style hospital accommodation and/or conditions. Think of your worst inner city hospital, and I'd rather be treated there with the $55 Tylenol.  

LawsofPhysics's picture

Fuck China, what's another 1.2 trillion on the Fed's balance sheet?  I mean really, "at this point, what difference does it make?"

tradebot's picture

I remember back to the first QE...we knew then, they could never stop once they started...QE and Zirp til it ends badly.

kliguy38's picture

The economy is so strong and the recovery is so steady that by March of next year we should normalize 10Y at 5.5% and "all is good"......so BUY MOAR STAWKS!!!

Hopeless for Change's picture

"Rate Hike Next Year"  is the same as the "Free Beer Tomorrow" sign in the bar.  It is never tomorrow, it is always today.

Ban KKiller's picture

Unintentially, you sound like a bankster....thanks for the laugh.

luckylongshot's picture

Why are we even seeing stories of a possible rate hike - it is so blatantly obvious it will only happen when the Rothschilds decide they want to crash the system and steal the few remaining assets they do not own. Apart from that there is no way it will ever happen and the reason is simple..You cannot taper a Ponzi.

yogibear's picture

No rate hikes until the markets force the Fed through a currency crisis.

The US is like Japan. The Federal Reserve has identical models for both.

Except Japan doesn't depend on overseas funding like the US does.


khakuda's picture

Still waiting for them to figure out that ZIRP/NIRP/QE are not the solution and are making things much worse...


Jlasoon's picture

I mean, you have to love this government. Destroy the economy, kill jobs, substantially increase cost of living, 'jack-up' health insurance rate premiums, force everyone to rent a 'shitbox', economically enslave a whole generation through exorbitant college tuition , and turn around and promise free healthcare, free maternity leave, free college education, free abortions, free this, free that. Not bad!


gaoptimize's picture

Peter Schiff is being vindicated month after month.  I'm trying to enjoy the remaining months before he is fully vindicated.  For example, I dedicated my Karaoke performance on Saturday of Dr. John's "Righ Place, Wrong Time" to Kevin McCarthy, after he dropped out of the House Speakers race.  Not many diners at Applebees got it, but it was well received by those who did.

Jlasoon's picture

That's what I'm afraid of. Peter has been dead on lately. If his predictions pan out we're all fucked. Heck, even I thought the Fed would raise rates. 

Md4's picture

A zero rate, once it became clear it was being misused to inflate assets artificially and to stimulate racketeering in carry trading, should've been halted immediately.

Our outsourced middle class economy was dead long before zirp. Whatever "stimulative" effects were once possible ended with the Greenspan-Bernanke easy-credit era. And even those, as we have seen, were, at best, very deleterious and very temporary. They weren't stimulating any organic growth here; only inducing organic growth in the receiver nations (China), until the credit, not serviceable on dying domestic incomes, was maxed out.

China is falling apart precisely because we can't consume. We can't consume precisely because we outsourced our incomes.

It's over.

There's nothing to stimulate.

A rate rise, at this point, only sets it all off.

Unless...something else does first.

Maybe that's the reason for the Fed foot dragging (WE didn't do it--THEY did)...


fowlerja's picture


Rate-Hike Odds Are Plunging - March 2016 Now A 'Coin-Toss"

I also thought the Fed used this "tried and true" method to determine rate hikes...I am just amazed that it has landed on heads all these times when decision time came...no wonder we keep getting mixed signals...wait...I am looking closely at the coin...damn both sides have heads...

gcjohns1971's picture

Why do people even include the POSSIBILITY of a rate hike in their discussions?

A rate hike is impossible without collapsing the currency.

Really, really.

To know why a rate hike in REAL TERMS is IMPOSSIBLE you need only know two things.

1)  The Dollar is a CB credit secured by an equal face-amount of debt.  Since the Dollar, and the debt have equal face values, but the debt also has an interest rate, which gets paid first (eg before maturity) there is NEVER ENOUGH MONEY TO PAY DOWN THE DEBT.  IT IS IMPOSSIBLE.  And so the debt must continually expand such that the new debt rolls-over the old plus accumulated interest.

2)  In 2008 the accumulated interest payment from all this debt became larger than the real economy can pay.  If you can't borrow more to roll-over the debt backing the currency, then the current debt backing the currency will go bust...because there isn't enough money in existence to retire it BY DEFINITION!!!!!!  When the debt backing currency defaults, the currency it backs ceases to exist.  It is that simple.

Since 2008, the gov't and Fed have coordinated to add more dollars, secured by more debt, with more interest...so that the maturity date of the problem will be delayed.  But nothing is fixed.  2008 has simply been rescheduled ...  at great expense.

 The problem is that the interest payments cannot be made...the accumulated debt is too big to service. 

So, why would anyone think the Fed would make the debt EVEN MORE impossible to service?????

They raise rates and a chain-reaction-global contagion of defaults will start, which will take out the global system of debt-secured fiat currencies, whole and entire.

It is that simple.

So long as our current monetary system remains, they will NEVER RAISE RATES.

herkomilchen's picture

This doesn't conform to my understanding of how fractional reserve banking works.

First of all, you seem to neglect the existence of base money, i.e. cash and deposits held with the Federal Reserve.  These dollars are not created by commercial banks and are not backed by bank-issued debt.  They are created by the Federal Reserve and backed by its assets which include gold certificates and government bonds (backed by the power to tax, i.e. seize money and physical assets at the point of a gun).  All bank-issued debt could be paid off and this base money would still exist.

But for that matter, bank-issued debt money could be used to retire the debt that creates it.  You talk about there not being "enough money" in existence as if debt-money is consumed when used to pay interest.  This is not the case.  Debt-money is only destroyed when the principle is paid off.  Once bankers receive their vig, they spend it on goods and services releasing those dollars back into circulation so the cycle can repeat as necessary until their demands for interest are satisfied, i.e. all principle is repaid.  So long as any principle remains unpaid, there will be money in existence that can cycle around to satisfy interest payment requirements.

Since interest money can be recycled infinitely between creditors and debtors, money is obtainable on a cumulative basis in any quantity needed by debtors so long as they are able to produce the necessary amount of goods and services.

gcjohns1971's picture

Q:  What happens to a secured paper asset when its collateral is deeply discounted, or even outright defaults?

A:  The secured paper, now unsecured, reduces in value to zero...it defaults too.

Q:  How is the dollar 'printed'?

A:  They use a face-amount of interest bearing debt to secure the creation of an equal amount of face-value currency.

Q:  Can debt securing currency be retired?

A:  No, the secured paper, now unsecured, reduces in value to zero...it defaults too.  So you can't retire such debt without wiping out the currency based on it too.

Q:  Can you pay down such debt?

A:   No.  You can't pay down debt securing the currency.  Currency is created using the FACE VALUE of the debt...after which some of that currency is retired when interest on that debt is payed, leaving too little currency to retire the underlying debt (and currency).

Q:  What happens if you MUST pay down the debt backing the currency???


Q:  But what happens if you REALLY, REALLY, REALLY NEED TO REDUCE THAT DEBT, because the interest payment on it is too large for the underlying economic principal to service????


Q:  What happened in 2008?

A:  The service costs on the debt backing the currency became too great for the rest of the economy to service.

Q:  But isn't that just commercial debt?????

A:   Yes and no.  All bank debt creates currency through the fractional reserve process.

Q:   So, the government and Fed fixed that, right??  By printing a bunch of money???

A:  NO!  AREN'T YOU LISTENING????  Since the economy could not borrow more to allow expanded debt, so there could be enough currency to roll-over the current debt, the government did it for them. This is 'unsterilized monetary expansion'.   The effect is to ADD EVEN MORE DEBT...but to delay the problem's deadline by changing the debt's maturity date.

Q:  So, when will they raise rates?

A:  AREN'T YOU LISTENING?  They cannot raise rates!!!!  The economy ALREADY CANNOT SERVICE THE DEBT IT HAS, EVEN WITH NEAR ZERO RATES.  Raising rates will expand defaults, which will wipe out the currency created by those defaulted debts, which will leave too little currency to rollover the other debts, repeating the process over and over until both the debts, and the dollars based on them have defaulted.

Q:  But can't we just tighten our belts and pay down the debt?



I give up.

There will be no raise in rates.


(or until this monetary system is gone)