CITIC Securities says the Fed held in October as expected; the statement was
more upbeat on growth while policy guidance was more circumspect. Post-meeting
remarks from Fed officials were milder than in September, noting tighter credit
conditions, inflation expectations moving in the right direction, and flagging
changes to the FOMC meeting schedule over the next two years. CITIC continues to
expect a 25bp hike in December and judges the terminal rate in this tightening
cycle is likely to remain close to current levels. New developments in the
Middle East is not yet sufficient to create a clear, durable de-escalation path
between the US and Iran; oil prices could stay elevated until the picture
clarifies, and further improvement in USD liquidity will need a fresh catalyst.
