Fed-funds futures traders are boosting the odds of a quarter-point rate hike in May, following an anticipated move of a similar size in two days.
Traders are boosting the odds of a quarter-point rate hike in May, following an anticipated move of a similar size in two days.
The thinking suggests that policy makers will look past recent pressures in the banking sector to some extent, and hike rates two more times. In fed-funds futures trading, the odds of a quarter-point hike at this week’s Fed policy meeting jumped to 73.1% on Monday from 62% on Friday, and the likelihood of another move of that size in May rose to 38.2% from 20.7% previously. In addition, 1-month TMUBMUSD01M and 3-month T-bill rates TMUBMUSD03M jumped in morning trading.
The first theory refers to the notion that there is “never just one” cockroach, he wrote in a note, suggesting that the banking-sector’s woes may not be contained to only a small circle of banks. Wall Street is divided over what happens next. While economist David Mericle of Goldman Sachs GS expects the Fed to pause on Wednesday, BofA Securities’ Mark Cabana, Michael Gapen, and Alex Cohen are forecasting a “jittery” 25-basis-point hike. The BofA team also see the Fed ending its rate-hike campaign between 5.25% and 5.5% versus the current level of 4.5% to 4.75%.
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