“The FFFs [Fed funds futures] currently predict a 50% chance of a 50-bps hike in September; however, we expect these odds to decrease as we approach the FOMC meeting due to generally acceptable economic data. Should the Fed cut by 50 bps, however, we think the market’s reaction will be positive initially, but a sell-off could ensue as concerns about the economy and strength in the Yen will revive the carry trade unwinds,” Arnim Holzer, global macro strategist at Easterly EAB Risk Solutions, said in an email.
