Fed now likely to delay first rate hike until early 2016

It is highly unlikely that the Fed will spring a surprise rate hike at next week's FOMC meeting, which concludes on Wednesday 28th October, and even the odds of a hike at the December meeting have fallen precipitously in recent weeks. We think that the Fed will wait until March next year. Beyond that, however, we are still convinced that rising wage growth and inflation next year will prompt a much more aggressive monetary tightening than markets currently have priced in.