Wall Street’s odds have reversed since the Brexit vote.
Wall Street is betting Brexit will change the minds of the Janet Yellen and the Federal Reserve.
Before Britain voted to leave the European Union last week, the majority of traders believed the Fed would raise interest rates at least once in 2016, according to Bloomberg data. Since Brexit, though, those odds have plummeted to next to nil. In fact, according to traders, the probability of a rate cut is not larger than a rate increase, according to traders.
The probability of a federal funds rate hike at the Fed’s next three monthly meetings has collapsed to 0%, and traders are assigning a less than 8% chance of a rate increase at all this year. Earlier in June, Fed policymakers had indicated that they expected to raise rates twice this year, following their last increase in late 2015. But investors worry that Britain’s decision creates too much economic uncertainty and market turmoil to keep the Fed’s plans on track.
No rate hikes due to Brexit and possibly a return to QE... any hint of QE will send gold higher....
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