The most discussed and telegraphed Federal Reserve action in history has rates on the move…maybe December 16th. Five years plus of Zero rates is coming to an end according to market indicators.
The conundrum for objective market watchers is whether the economy is strong enough to support a boost versus or if it could weaken sentiment.
Good new is there is a tool for that…. Check out this amazingly simple tool that illustrates what the market has priced into the fed funds futures.
Fed fund futures are the shortest time frame on the yield curve and reflect expected monetary action. The monthly contracts price adjustments compared to the Fed calendar give us the markets best assessment of policy changes.
The CME Group has a probability tool that takes out much of the guesswork using futures price action to predict. Check it out —> http://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html
With a week to go before the FOMC, the probability of a rate hike has increased from 70% in the previous month to 83%.
This extrapolation is no guarantee… but odds are convincing that the deal is done. For those looking past this current prediction, another hike is 50/50 for the March meeting.
