The chance of a 50 bps rate hike tomorrow, according to the market's assessment at today's close, has increased to 9%. That's higher than I would have guessed:
CBOT Fed Watch - August 8 Market Close - Based upon the August 8 market close, the CBOT 30-Day Federal Funds futures contract for the August 2005 expiration is currently pricing in a 100 percent probability that the FOMC will increase the target rate by at least 25 basis points from 3-1/4 percent to 3-1/2 percent at the FOMC meeting on August 9.
In addition, the CBOT 30-Day Federal Funds futures contract is pricing in a 9 percent probability of a further 25-basis point increase in the target rate to 3-3/4 percent (versus a 91 percent probability of just a 25-basis point rate increase).
August 2: 96% for +25 bps versus 4% for +50 bps.
August 3: 96% for +25 bps versus 4% for +50 bps.
August 4: 96% for +25 bps versus 4% for +50 bps.
August 5: 94% for +25 bps versus 6% for +50 bps.
August 8: 91% for +25 bps versus 9% for +50 bps.
August 9: FOMC decision on federal funds target rate.
Thus, according to the CBOT 30-Day Federal Funds futures contract, there is a 100% chance the target rate will increase .25% to 3.50%, and a 9% chance it will increase an additional .25% to 3.75%.