Latest policy speeches from FED officials indicated that a broad range of FOMC participants (including bellwether centrists) are prepared to raise rates at the December meeting.  Their readiness to act will still subject to changing economic conditions both at home and abroad.  If data between now and December 15th do not deteriorate notably, then this month’s meeting is likely a “go” with rate hike.

The following risk factors may still derail the now-expected start of policy normalization (Chair Yellen expressed optimism toward these indicators at the Dec 2nd speech, and unexpected reversals would therefore diminish her confidence):

1. Foreign economic risk
   1. Further signs of weakness in China, or indication that the People’s Bank of China is unwilling to offset the aforementioned weakness with further easing
   2. Further signs of European economic weakness
2. Domestic economic slowdown in the form data weakness
   1. U.S. Bureau of Labor Statistics (BLS) will release the November Payrolls data tomorrow (Dec 4th), and this will be the final major labor market report before the December FOMC meeting
      
   2. The BLS will also release the November CPI on the day of the FOMC meeting (Dec 15th) – policymakers will have the latest realized inflation data for their deliberations
      
3. Another significant decline in energy prices, which would “push out” the path of overall inflation returning to FED’s 2% objective, measured in Personal Consumption Expenditures.  If WTI drops to low 30s, it would be time to worry
   

Finally, recent FED speeches were released with a purpose of setting market expectations.  The FOMC does not like to surprise the market on concerns that undesirable market volatility may changes the level of funding cost to unintentionally constrains economic activities.  A December rate hike is currently 76% priced in, and some FED officials may think twice if this probability drops below 50%)