Fed Fund Futures Calling For December Rate Hike… In 2013
February 3, 2012 by Jon C. Ogg
Fed Funds Futures are not widely used by Joe Public, and much of the public may not even understand or know what these are. The layman explanation is that they predict when the FOMC rate hikes are expected to start.
The Fed Funds Futures are very different today from a week ago after Ben Bernanke and his minions at the FOMC predicted that rates would be “exceptionally low through at least the end of 2014.” Prior to that, it was a mid-2013 promise. The reality is the FOMC has no obligation to commit to any time frame and the late-2014 was a projection rather than a commitment. Still, this was a ‘risk-on’ signal if there ever was one.
Fed Funds Futures are now showing a 100% chance of a rate hike in December 2013. That is the first month where the price is under 99.75 and this is the first time in quite a while that a rate hike has been this close. What is interesting is that there is still close to an 80% chance of a rate hike by August of 2013. Should you panic? Absolutely not. The rate hike would just remove the 0.00% to 0.25% range up to a formal 0.25% Fed Funds Rate.
It is still all the way out to September of 2014 now before the Fed Funds Futures are calling for a 100% chance of a 0.50% Fed Funds Rate.
Daily rates can be seen here for Fed Funds Futures from the CME.
JON C. OGG
Take This Retirement Quiz To Get Matched With A Financial Advisor (Sponsored)
Take the quiz below to get matched with a financial advisor today.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the
advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Take the retirement quiz right here.