Is September the play on Fed action? If you use the most recent survey of economists, September should be the time for a Fed rate raise. 70% of the economists surveyed believe that the September FOMC will be the time for the first move. Of course, if you look at what economists have been thinking since the beginning of the year, you will get a good idea of how far off they have been with their forecasts. We have clearly moved from a median view of June to September as the overwhelming consensus based on weak economic data.
If you look at the Fed fund futures, you get a a different picture which is more uncertain of when the Fed will take action. There may be some issues with the calculation used in the CME Fed watch table, but the picture tells us that investors do not completely share the view of the professional economists. The market has gotten burned too many times with expectations of a Fed increases to fully embrace the economist's consensus. There is more probability mass for no action.
Traders do have some good opportunities to express their views in futures. Assume that you use September as the key leverage point. Option strategies can be developed to tilt either side of a September action. The play could be to fad a September action and play against the probabilities seen in the market.
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