FYI: After yesterday’s weak economic data, lowered guidance from Apple, and a 2%+ drop for the S&P 500, pricing for the future path of the Fed Funds rate reached an extreme level of negativity, with every futures contract trading lower in price than the current one. This meant that the market probability of cuts was greater than that of hikes for every forward period. Given Fed expectations of two rate hikes per the statement of economic projections at the December Fed meeting, that is a market that is very much fighting the Fed!
After today’s strong jobs number, however, futures markets have shifted a little more hawkish, as shown in the chart below. The dark blue line shows the Fed Funds curve as of yesterday, while the light blue line shows the curve today.
Regards,
Ted
https://www.bespokepremium.com/think-big-blog/fed-funds-futures-put-hikes-back-on-the-table/
