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Wednesday, December 07, 2005

CBOT Fed Watch

The chance of at least a 25 bps rate hike at the next FOMC meeting on December 13, according to the market's assessment at today's close, is 100%. The market assesses a 4% chance of a 50 bps hike:

CBOT Fed Watch: Based upon the December 7 market close, the CBOT 30-Day Federal Funds futures contract for the December 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 4 percent to 4-1/2 percent... In addition, the CBOT 30-Day Federal Funds futures contract is pricing in a 4 percent probability of a further 25-basis point increase in the target rate to 4-1/2 percent (versus a 96 percent probability of just a 25-basis point rate increase).

Summary Table
December 6:  97% +25 bps versus 3% for +50 bps.
December 7:  96% +25 bps versus 4% for +50 bps.

[Note: There is a typo in the write-up from the Board of Trade.  The first 4-1/2 should be 4-1/4.]

    Posted by on Wednesday, December 7, 2005 at 04:48 PM in Economics, Monetary Policy | Permalink  TrackBack (0)  Comments (0)

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