U.S. Markets close in 4 hrs 23 mins

Here's Why The Next Fed Rate Hike Won't Happen Until 2018

Jayson Derrick

The majority of investors, traders and analysts are convinced that a Fed rate hike is coming. Where they all disagree is the timing.

According to Bloomberg, traders are not pricing in a Fed rate hike through the end of 2017, are assigning a more than 50 percent chance of a rate hike in the beginning of 2018 and aren't pricing in a full rate hike until the end of the year.

Bloomberg noted that options on EuroDollar futures imply just a 25 percent chance of a rate cut by September, marking a sharp decrease from just two months ago when the prices indicated a rate hike was a "virtual certainty."

Related Link: Consultants And Experts Are Raking In Billions Of Dollars From Stress Test

Aaron Kohli, a fixed-income strategist at BMO Capital Markets shared a somewhat similar sentiment with Bloomberg. He said that the market "doesn't even begin to price in any real chance" of a rate hike until mid-2017 at the earliest.

Naturally, nothing is set in stone, and Fed policy makers make use of many variables informing a decision.

"You are not going to get any activity out of the Fed right now," James Camp, director of fixed-income at Eagle Asset Management also told Bloomberg. "They do not want financial conditions to tighten any further and they certainly don't want to continue this dollar stampede."

See more from Benzinga

© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.