US: Reasons to believe the Fed will not rise rates -  Danske

Analysts from Danske Bank presented 10 reasons why they believe the Federal won’t raise rates during 2016.

Key Quotes:

“GDP growth has slowed markedly to just around 1% q/q AR over the past three quarters – annual GDP growth declined from 3.3% y/y in Q1 15 to 1.2% y/y in Q2 16.”

“Unemployment and underemployment rates have moved sideways for some time.”

“Wage growth has picked up but is still subdued.”

“PCE core inflation has moved sideways this year – it has only been at, or above, target for five months since 2008”

“Inflation expectations (both market-based and survey-based) have moved lower.”

“ISM is the weakest it has been since 2010 and is in easing, not hiking, territory.”

“Weak business investments as non-residential investments have declined for three consecutive quarters.”

“The Fed has already tightened monetary policy equivalent to 330bp due to QE tapering and hiking expectations.”

“Most voting FOMC members have a dovish-to-neutral stance on monetary policy, in our view.”

“Do not always believe in Fed guidance, even if the Fed seems eager to hike.”