First Fed rate hike eyed by traders on 2015

By IVC Staff Reporter

Nov 02, 2013 04:58 AM EDT

According to CME Group's Fed Watch, futures prices suggested that no earlier than April 2015 the Federal Reserve would raise the rates. On Wednesday, traders of US short-term interest-rate futures made their bets that Fed officials would wait by April before rates would be raised. Traders decided on such bets after the Federal Reserve decided to keep in place its substantial stimulus program.

Futures is a uniform contract among two parties to sell or buy a specific skill of standardized quality and quantity for price agreed upon. A specified delivery date and payment are also agreed upon.

The CME Group's Fed Watch generated such probabilities centered on prices of Fed funds futures dealt at the Chicago Board of Trade. The probability of an increase in the said month would be estimated at about 51%.

Early reports claimed traders saw the probability of 59% increase in interest rate by April 2015. Now, traders saw the probability rising to around 70% by July 2015.

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