Hawkish Or Dovish? Mixed Signals On Fed Policy

The dovish tone following the March meeting signaled a shift in Fed policy as the markets now seem to be expecting the next rate hike not in June but in the second half of the year. The more recent Federal Open Market Committee (FOMC) meeting brought more hawkish comments, demonstrating that U.S. policy makers remain highly uncertain about what to do next. Despite the mixed signals, Credit Suisse analysts don’t feel they need to reprice changes in Fed rate hikes right now.

It should be noted that this week we're expecting at least four new data sets that may impact Fed policy and tone around the June meeting: the National Accounts, Balance of Payments, and Household Borrowing reports, all of which are due on Thursday, and the Markit/ CIPS report on Manufacturing, which is expected on Friday.

Number of potential outcomes for Fed policy falls