Might as well drop the odds of hike to 0%
The odds of a June FOMC hike are down to 14% from 21% before the FOMC. They can now safely fall to zero.
The Fed's Kaplan said the Brexit vote will be a factor in the decision. The thing is, the vote is a week after the FOMC so the Fed won't know how it will play out.
The latest polls show a close vote once again but betting sites show it's a longshot because the 'undecided' votes will swing towards the status quo (as they always do). In any case, the Fed won't hike.
Other comments from Kaplan:
- BOJ decision was not surprising
- Chinese economic situation stabilized somewhat
- China has potential to disrupt markets for some time
- More likely UK won't exit EU
- If GDP and jobs reconcile he would advocate for hike
- US labor market has been strong
- US consumer getting stronger
- If economy improves in next months, will back hike
- Fed hopeful US GDP will rebound from weak Q1
The other point on GDP is that we won't know Q2 GDP until after the July FOMC, although they might have a decent handle on what it could be.
