Those who prefer trading signals to economic history can look to the CME Group’s FedWatch which offers a probability distribution for the funds rate based on the Fed Funds futures market. As of Friday afternoon, the odds for the funds rate on September 17th were 77% for 25 bp and 23% for 50 bp. Looking ahead to the December FOMC meeting, the odds for 25 bp are 41%, 43% for 50 bp and 16% for 75 or 100 bp.
Taking everything together, a rate hike is coming but no one knows when.
This article was written by David Blizter, Chairman of the Index Committee, S&P Dow Jones Indices.
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