Let’s have a quick Fed recap:
-Fed Funds Futures are now pricing in a 100% chance that the Fed raises rates by a total of
50 bps by the October meeting.
-Futures place a 24% chance of a 75bps increase by October.
-Futures By the January 2009 meeting, we have a 98% chance that Fed Funds rate will be raised by a total of
100 bps to 3%.
Is the Fed likely to be raising rates in this environment? Will we see a new tightening cycle? Or, is the Fed merely jawboning in response to a more Hawkish ECB?
What say ye?