Government Shutdown, Continued Oil Price Drop Could Prevent December Fed Rate Hike: Macquarie

 Macquarie, an Australian investment bank, says the Fed’s December rate decision isn’t as locked in as markets imply, thanks to shutdown risk in Washington and a sharp drop in oil prices.

Rate traders are still assuming the Fed hikes again: the CME FedWatch tool implies an 87% chance of a 25-basis-point increase in December, with most of the rest leaning toward 50 basis points. But Macquarie strategists Thierry Wizman and Gareth Berry argue the weeks before the meeting are packed with potential curveballs. First, Congress faces a December 11th funding deadline; a shutdown can delay or distort key economic releases, leaving policymakers with less.

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