Higher yields, volatility and a stronger US dollar - Socgen

Kit Juckes, analyst at Societe Generale explained, in respect to the FOMC, that 10-year Treasury yields are going to start the new week at 1.69%, compared to an average level in July/August that was just above 1.50%.

Key Quotes:

"Higher, not high as we enter FOMC week; whether we settle back into a range that is only marginally higher than what we saw over the summer or move higher still, holds the key to markets in the weeks ahead.

Which isn't the same as saying that whether the FOMC does or doesn't raise rates this week is the be-all and end-all. Markets price the chances of a hike as a very long shot and after the experience of 1994, the FOMC has been paranoid about making sure that the market isn't too surprised by a move.

I can't see this, the most cautious FOMC in memory, going for a big surprise.

But by the same token, if the FOMC does want to keep the window open for a hike in 2016 (and everything we've heard suggests that many on the committee do), the statement and accompanying message will be relatively hawkish. And since the market still prices a very, very slow pace of rate hikes in the next couple of years (fewer than three 25bp hikes in 24 months), I still expect higher yields, market volatility and a stronger dollar."