Rate hike indicator: the 3 month treasury
The reason for Friday's massive market selling is said to be because of the Fed's message that the rate hike is coming.
Seems that it may just be broad market selling after a period of complacent low VIX and broader overvaluation.
For confirmation that the rate hike is coming I'll be watching the 3 month treasury rate closely for signs.
A move from .30 to .55 would seem reasonable over the next several months if we are to see 25 bps increase for 2016.
In 2015 the 0.25% rate increase was starting to be priced in by late October into early December.
The CME Fedwatch tool currently shows the futures are betting on 58% chance of rate hike by Dec.
Seems that it may just be broad market selling after a period of complacent low VIX and broader overvaluation.
For confirmation that the rate hike is coming I'll be watching the 3 month treasury rate closely for signs.
A move from .30 to .55 would seem reasonable over the next several months if we are to see 25 bps increase for 2016.
In 2015 the 0.25% rate increase was starting to be priced in by late October into early December.
The CME Fedwatch tool currently shows the futures are betting on 58% chance of rate hike by Dec.