Fed governors pushing for live December meeting

We continue to expect a December hike at the earliest while acknowledging the near-term risks have increased. Our view comes from the fact we have seen this playbook before with Fed Vice Chairman, Stanley Fischer happy to play the wild card to put some uncertainty and volatility into rate expectations. The two most important Fed members surrounding forward guidance have historically been Janet Yellen and the New York Fed Governor, William Dudley. Both have now pushed to get December priced as live, but not the immediacy of the very near-term. Thus, it appears Fischer used the hammer to crack the nut. After December, our base case is for 1 to 2 hikes in 2017. Then with four hikes in the system, we may start to see some trouble brewing.