Wondering what the Fed will do next? Risk from a strong dollar could change the central bank's policy path, one expert said.
"The credit risk deterioration we saw in July only happens at that speed right around or before recessions," Larry McDonald, head of U.S. strategy at Société Générale's macro group, said Monday on CNBC's "Power Lunch." "If you look at the major credit indices, whether it be high-yield bonds, investment-grade bonds, emerging market bonds ... credit markets could impact the Fed policy path going forward."
For months, financial markets have eyed the timing of a Federal Reserve rate hike amid concerns of global volatility. But some key indicators, including a strong dollar, could push the rate rise out to 2016, or even spur quantitative easing in the U.S., McDonald said Monday in a note.