CITIC Securities says the Fed raised 25bps in September as expected and upgraded
its growth and inflation forecasts; the dot plot and Fed remarks were hawkish.
Strong market expectations made the September hike the path of least resistance.
The timing and size of further hikes will depend heavily on oil prices, which
remain unpredictable; with headline inflation YoY likely to drop notably in
early next year, the case for additional tightening should weaken. CITIC expects
one more 25bps hike before year-end and a likely pause next year. US financial
conditions are unlikely to ease meaningfully; investors should favor assets
with fundamental support rather than those that rely solely on liquidity.
