Economists are about equally split on whether the long-awaited move will come, though futures market trades are pointing to at least one more month of the Fed delaying its 0.25 percentage point increase in the fed funds rate.
But market participants say they have already priced in that rate hike, and its exact timing will not shake their long term bets.
For some, the repricing of the S&P 500 in recent weeks, spurred mostly by weakness in China and other foreign markets, may have actually given the Fed room for the rate hike.
“It has made the world a safer place for the Fed to do whatever they have to do in the next few weeks,” said John Manley, chief equity strategist at Wells Fargo Funds Management. Traders have already priced in the increase, and whether it comes in September, October or December “isn’t going to make an enormous difference,” he said.
Traders still expect the next month to be somewhat jittery, and may be watching industrial output and retail sales data out of China early next week for signs of just how weak Asian markets could be.
The Fed has tried to signal its move to markets, but a Reuters poll of economists gave the probability of a September move a 50-50 chance, down from a 60 per cent median probability predicted in a survey taken last month.