There is a key point that many people are in the dark about or not aware of which I feel is important to bring to everyone’s attention as it changes so much next year when one considers this. You see there have been many questions recently, about how the FED will raise rates and that is because of two reasons:
1.) The markets know (those who are not in denial) that once the FED makes the initial tightening and normalizes monetary policy, the process will continue with subsequent rises until a complete return to normality is raised. In short, once that first step is taken, all subsequent steps become much easier.
2.) Some voting Fed officials have said that they want to see the rises to be gradual.
What many do not realize is that the voting members of the FOMC change next year. And from a look at the new voting candidates, its likely to be a much more hawkish comittee than the current doves.
N.B. Many of these hawks said they would have hiked in September, when the voters said they only delayed over concerns regarding Chinese growth. Had these guys been voting, you would not only have had a rise in September, but possibly a Second one later this month as well.
Bear this in mind. Next year you have a more Hawkish committee and do not be surprised if following December’s rate hike, we experience 3-4 subsequent rate hikes in 2016. This is what I expect.