The fed funds futures thinks Bernanke will be all talk and no action

While the US$ caught a bid this week, albeit modest, in part due to Bernanke’s acknowledgement of it on Monday in terms of its impact on commodity prices and thus inflation, the fed funds futures continue to reduce its belief that he’ll follow words with actions. Since Friday’s close, full odds of a 25 bps rate hike have now been pushed out to Sept 2010 from Aug. Odds of a 25 bps hike by Aug have fallen from 100% last Friday to 66% today. Odds are just 4% that the Fed raises to .75% by Sept, down from 46% last Friday.

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