Three Must-See Charts About the Future of Fed Policy

The video discusses the impact of the Brexit vote on Fed rate cuts, highlighting increased market pricing for rate cuts and the unusual nature of this development in a tightening cycle. It examines market reactions, the strength of the US consumer, and the implications of inflation and deflation instruments. The discussion includes the sensitivity of Fed funds futures to macroeconomic changes and the contrasting probabilities of rate cuts and deflation.

What unusual development occurred in the Fed's interest rate decisions post-Brexit?

• Increased probability of rate hikes

• Increased probability of rate cuts

• Stable interest rates

• Decreased probability of rate cuts

What is one reason for the strong position of the US consumer?

• Decreased wages

• High inflation rates

• Increased disposable income

• Rising gas prices

How do Fed funds futures react to macroeconomic changes?

• They increase in value

• They decrease in value

• They are highly sensitive

• They remain stable

What do deflation instruments pay out based on?

• Positive inflation

• Negative inflation

• High interest rates

• Stable inflation

What factor might explain the lower probability of deflation despite rate cut probabilities?

• Increasing interest rates

• Falling oil prices

• Stable oil prices

• Rising oil prices