Could Fischer have misdiagnosed the causes of volatility and invited a tug-of-war with markets?
S&P 500
The implied probability of a September hike in Fed funds futures has risen to 38% from 30% earlier today and 22% earlier this week.
Fischer acknowledge the latest round of market volatility as a factor that made a hike less likely but sounded as if he would have voted for a hike if not for the market moves. He also sounded like he might vote for a hike if markets settle.
He called China the trigger for the stock market selling but I would lump fears about Fed hikes into the equation as well.
If he thinks it was all about China then markets might be preparing to send him another message. At the moment, the S&P 500 is at a session low, down 11 points to 1976.
All the matters is the final hour of trading.
