Tuesday, August 23, 2016

CME Fedwatch Tool Has Odds For A September Rate Hike Up To 24% (from 15% yesterday)

From Humble Traders:
Based on CME Group 30-Day Fed Fund futures prices, which have long been used to express the market’s views on the likelihood of changes in U.S. monetary policy, the CME Group FedWatch tool allows market participants to view the probability of an upcoming Fed Rate hike.The data below is to visually show the market’s expecations of FED’S interest rate policy for the rest of the year.

As all talking heads tend to flood the internet with probabilities of rate hikes and theories behind them, nobody is putting it in the time perspective. I find it very frustrating....MORE, including charts.
He'll update his charts on Wednesday but what caught my eye was the bump up in implied probability over the last couple days. The Fed's current target rate is 25-50 bps and the odds of it remaining there is still 3-1 but the futures are now pricing in a greater chance we go to 50-75 bps.
From the CME:

Target Rate (bps)