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The Implied Probability Of A March Rate Hike Just Hit 100%: Winners & Losers
Three months after its first interest rate hike in a year, the Federal Reserve may already be poised for another hike during its upcoming meeting that begins on March 14.
In other words, futures traders see a combined 100 percent chance of at least a 0.5 percent interest rate hike this month.
According to CME Group’s FedWatch tool, the market seems to have zero doubt that an aggressive rate hike is imminent.
It’s Coming, And SoonThe Fed Fund futures market is currently pricing in a 90.8 percent chance of a 75–100 bps March hike and a 9.2 percent chance of a 50-75 percent rate hike.
However, public comments by Fed Chair Janet Yellen and other policymakers in the past week strongly suggest the Fed plans to take an aggressive approach to interest rates.
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Fed Fund Futures, which gauge the probability of monetary policy moves, show traders putting the odds of a March rate hike at 81.9%.
Not only should investors prepare for a rate hike to be announced at the FOMC’s two-day meeting later this month, they should also brace for a faster pace of increases compared to prior years, according to Fed Chair Janet Yellen.
Members of the FOMC will hold their two-day meeting on March 14-15 with a decision on rates expected Wednesday, March 15.
However the Dow Jones Industrial Average hovered around the 21000 level on Friday, a key milestone reached earlier in the week.
Continue Reading Below“We currently judge that it will be appropriate to gradually increase the federal funds rate if the economic data continue to come in about as we expect.
collected by :John Locas