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2 Mar 2016
Fed rate hike probability rises, but overall stays below 50%
The investors in the US are reconsidering the possibility of a Fed rate hike this year following the release of upbeat US data over the last week.
The US personal spending, durable goods orders and core personal consumption expenditure data released last week beat expectations. The manufacturing PMI numbers released yesterday beat estimates and triggered speculation the sector may have bottomed out.
Meanwhile, the ADP report released today showed the private sector job growth accelerated in January. The financial markets appear to have stabilized as well.
Consequently, 30-Day Fed Fund futures prices show the market thinks there is a 40.6% possibility that the Fed will raise rates at least once by the end of this year. The probability stood at 17.1% a month ago.
The two-year treasury yield, which mimics short-term interest rate expectations, currently trades around 0.86% compared to a low of 0.582% seen in early part of the last month.
The US personal spending, durable goods orders and core personal consumption expenditure data released last week beat expectations. The manufacturing PMI numbers released yesterday beat estimates and triggered speculation the sector may have bottomed out.
Meanwhile, the ADP report released today showed the private sector job growth accelerated in January. The financial markets appear to have stabilized as well.
Consequently, 30-Day Fed Fund futures prices show the market thinks there is a 40.6% possibility that the Fed will raise rates at least once by the end of this year. The probability stood at 17.1% a month ago.
The two-year treasury yield, which mimics short-term interest rate expectations, currently trades around 0.86% compared to a low of 0.582% seen in early part of the last month.