Hawkish Fed to prompt commodity bears: Angel Broking

Views of Mr. Prathamesh Mallya (Chief Analyst - Non-Agri Commodities & Currencies, Angel Broking):

"Of late, the prospects of rate hike in the upcoming March'17 FOMC meeting, brightened starting right from William's Dudley's hawkish comment on February 28, 2017. He said the case for rate hike now seems "a lot more compelling" given rising confidence and expectations for fiscal stimulus post November elections. Other influential Fed members like Patrick Harker, Robert Kaplan, Lael Brainard, and Charles Evans too, joined in to support case for three rate hikes in 2017.

The final nail in the coffin came from Janet Yellen's speech on 3rd Mar'17, wherein she sent a strong signal indicating the Fed will act at its next policy meeting on 15th Mar'17, except for any unfavorable economic surprises. Following this, the probability of rate hike this month jumped nearly 78 percent to about 82 percent as per the CME's Fed funds futures. This would provide an additional boost to global equities which are already at record highs and pull investors away from commodities, especially the safe haven gold."

Source : Equity Bulls

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