Rate hike odds and inflation expectations update

By Peter Boockvar - November 5th, 2009, 2:20PM

With respect to future fed policy, here is an update in the fed funds futures for what is priced in for rate hikes in 2010. Odds of a 25 bps hike by the April meeting is now down to 28% vs 54% priced in just prior to yesterday’s FOMC statement release. Last Monday, the market had priced in a 90% chance of a hike by April. For the following June meeting, odds are down to 82% of a 25 bps hike to .5% down from 100% priced in midday yesterday and from a 64% chance of a total of 50 bps in hikes by June priced in last Monday. It is not until the August meeting now that the fed funds futures are fully pricing in a 25 bps hike. Inflation expectations in the 10 yr TIPS is up another 2 bps today to 2.14% and also is higher by 2 bps in the 5 yr to 1.79%.

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Category: MacroNotes.

Comments

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

One Response to “Rate hike odds and inflation expectations update”

Lord Blankfiend Says:
November 5th, 2009 at 5:10 pm
Inflation expectations may be forming another bubble. Oil is already close to levels that produce lower demand.