Global focus on a December interest rate hike by the U.S. Federal Reserve is accelerating.
According to a survey conducted by the Bank of America Merrill Lynch fund manager in November, 81 percent of those surveyed expect a December rate hike, up from 47 percent in October.
Now Deutsche Bank has jumped onto the bandwagon and has joined the existing group of countries that are expecting the Fed to finally make its move in a month’s time.
After the release of the Federal Open Market Committee (FOMC) meeting minutes on Wednesday, economists at Deutsche Bank said, "We are now in the December liftoff camp. The October meeting statement hinted at the Fed's strong desire to raise rates at the December meeting."
Fed Indecision Causes Fluctuation
The back and forth decision by the Fed for most of the year has caused international markets to fluctuate steeply and emerging markets have felt the brunt of the uncertainty with funds flowing out of the country at a significant rate as fears of a higher U.S. interest rate would offer investors more incentive to find higher, less risky returns elsewhere.
U.S. markets reacted to the Fed minutes with equities closing higher on Wednesday. The three major indexes hit their session highs following the release of the minutes, with the Nasdaq Composite up about 1.8 percent. Commodities were also up.
Despite this seeming recovery, a Fed rate hike in December is not a sure thing. Some investors read a certain amount of wavering in the released Fed minutes and those who see the possibility of a December rate hike has dropped from a 74 percent chance to 68 percent.