Sign up to create alerts for Instruments,
Economic Events and content by followed authors
Free Sign Up Already have an account? Sign In
George Siegel
Dec 25, 2018 10:53AM ET
time to buy gold?
1
0
Quotes
All Instrument Types
- All Instrument Types
- Indices
- Equities
- ETFs
- Funds
- Commodities
- Currencies
- Crypto
- Bonds
- Certificates
Please try another search
Final hours: unlock premium data with Claim 60% OFF
Rate futures market says Fed is all but done with hikes
Published Dec 24, 2018 02:56PM ET
© Reuters. Rate futures market says Fed is all but done with hikes
(Reuters) - The Federal Reserve is finished raising U.S. interest rates.
That is the message emerging from the interest rate futures market as Monday's full-blown flight from risk assets drove traders to price out nearly any prospect of further rate increases from the Fed, which raised rates again only last week.
Stocks fell sharply on Monday amid concern about slowing economic growth, the government shutdown and reports that President Donald Trump, increasingly angry about the U.S. central bank's rate hikes, had discussed firing Fed Chairman Jerome Powell. Trump on Monday labeled the Fed as the "only problem" for the U.S. economy, and Treasury Secretary Steven Mnuchin made unsuccessful efforts to soothe investors' concerns over Wall Street's deepening losses.
The federal fund futures contract expiring in January 2020 , watched closely as a gauge of where the Fed's benchmark overnight lending rate will be at the end of next year, surged 10.5 basis points in price on Monday.
That left the contract with an implied yield, which moves in the opposite direction of its price, of 2.41 percent, squarely within the current range for the Fed's target rate.
The Fed last week raised rates by a quarter percentage point for the fourth time this year to a range of 2.25 percent to 2.50 percent. The daily fed funds effective rate settled at 2.40 percent on Friday.
In conjunction with the rate rise, Fed officials released their individual forecasts for the level at which the federal funds rate will end 2019, with the median projection among the 17 policy makers targeting two more rate increases next year, to a range of 2.75 percent 3 percent.
The projections for further tightening, together with indications that the Fed will not veer from a related effort to winnow its vast holdings of Treasury bonds and mortgage-backed securities, helped accelerate the selloff in both stock and corporate debt markets.
The benchmark S&P 500 Index (SPX) is now on the doorstep of demarking a bear market for stocks, down about 19.8 percent from its record high in September, and corporate bond indexes are slumping as well.
Rate futures last week for the first time began pricing the possibility of the Fed reversing course on its rate hike regime starting in 2020.
At that time, however, the market also still reflected a modest probability of the Fed getting in one more increase in 2019. That prospect now appears all but gone.
Related Articles
Comments (3)
Gabe Domen
Dec 25, 2018 10:40AM ET
ok. Fed independence is a joke working as knee jerk institution on Wall Street and presidential reactions. Sad.
0
0
mansoor ali
Dec 25, 2018 10:32AM ET
Its good not raising rate now,,
0
0
Add Chart to Comment
Confirm Block
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
Report this comment
I feel that this comment is:
Comment flagged
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.