Odds Of Hawkish Monetary Policy Increase

The CME’s FedWatch tool puts odds of the Fed raising its target rate to 5.25%-5.5% at 99%, but the remaining 1% is for a steeper hike, a possibility that wasn’t there before this week. In fact, odds of a target rate of 5.5%-5.75% are getting higher for the following FOMC meetings, even as they remain lower than odds of a steady 5.25%-5.5% level. For September, the higher rates are priced at 21%, up from 14% a week ago, and for November they are at 35%, up from 27%. Spartan’s Peter Cardillo says all could change on macro news. “The percentage probably could reverse rapidly.”