The FOMC minutes release was the macro focus of the day.  The minutes said that most participants judged that if second quarter data showed a pickup in economic growth, then a rate increase might be appropriate.

Given the weak first quarter and that live tracking estimates of current growth are much better, the statement strongly implies a June hike.

The FOMC members observed that the labor market continues to improve even as economic activity slows and highlighted the recovery in stocks, more positive risk sentiment and the decline in market volatility.

Just yesterday, I said that despite a lot of speeches by Fed members suggesting a hike in the near term, markets were pricing in a four percent probability of a hike in June.  This afternoon, the odds jumped to just over 30 percent, suggesting skepticism, but also greater acceptance of the possibility of a hike.

The two-year Treasury note, which tends to be more sensitive to changes in the outlook for monetary policy, increased from 0.82 percent on Tuesday to 0.90 percent yesterday.

There is still some chance that the Fed will wait until July in order to find out what happens in the British referendum that could cause the UK to exit the European Union (known as the Brexit).

A poll by the Evening Standard puts the ‘Remain’ in the EU camp ahead of the ‘leave’ camp by 18 percentage points.  In addition, the Times of London showed 44 percent support for staying, while 40 percent want to leave.

Betting sites suggest that the odds of staying in the EU are currently 76 percent, but as we saw from the odds of a June Fed hike, markets don’t always get it right.