These days, it seems, everyone is trying to keep up with shifting market expectations for the Federal Reserve’s monetary policies. CME Group’s Fed Watch, which delivers a snapshot of those expectations based on futures tied to the Fed’s target for short-term rates, is no exception.
Rate futures traded at CME have dived since Fed Chairman Ben Bernanke said last week that the U.S. central bank may decide to cut back on its purchases of Treasuries and mortgage-backed securities in the next few Fed policy meetings if data shows the economy is gaining traction. CME’s website dutifully translated the drop in rate futures into rising market expectations that the Fed’s first rate hike since 2008 could come in early 2015.
NEW YORK/SAN FRANCISCO, May 29 (Reuters) – More traders are
betting the U.S. Federal Reserve might raise short-term interest
rates as soon as the latter part of 2014, which would be at
least six months earlier than previously expected.
The shift in expectations about the Fed came a week after
Fed Chairman Ben Bernanke’s remarks raised fears the central
bank might taper its bond purchases later this year.
MINNEAPOLIS (Reuters) – The job market and the economy as a whole may be strong enough in a few months’ time to allow the Federal Reserve to pare its bond buying by a small amount, one of the Fed’s most dovish policymakers said on Wednesday.
Halting the Fed’s monthly purchases of $85 billion worth of Treasuries and mortgage-backed securities would be “premature” at this time, Boston Federal Reserve Bank President Eric Rosengren said in remarks prepared for delivery to the Economic Club of Minnesota.