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Cues from the Fed Funds Futures

By Matthew Kerkhoff


The Fed meets this week and will deliver its monetary policy decision on Wednesday. Most investors, including myself, do not expect a rate hike for a variety of reasons. Sub-target inflation, lackluster wage growth, easing by foreign central banks, and global deflationary trends top the list.


Recently the market’s expectations for interest rate hikes have been more accurate than listening to the Federal Reserve members’ projections and speeches. On latter, it’s become an annoyance to hear these members so frequently espousing their individual views, injecting uncertainty into the market with a syringe. Why do they feel compelled to do this? Color me confused.


Anyway, markets and their unique ability for price discovery can help us figure out how major market participants are collectively viewing the likelihood of a rate hike, both now and in future months. In fact, we could go so far as to create our own market based “dot ... Log in or subscribe to continue reading.

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