Fed funds futures are lower led by deeper declines in 2019 contracts
Fed funds futures are lower led by deeper declines in 2019 contracts. The market continues to digest the upcoming change in leadership at the Fed, along with the data reflecting generally stronger economic growth, but mixed figures on inflation. The market remains priced for a 25 bp rate hike at the December FOMC, to a 1.25% to 1.50% target band. And while the futures are pricing in strong chance for another tightening in the first half of 2018, the market is reticent to literally follow the dot plot from September where the median points to three rate moves. Traders await the dot plot update to be included with the FOMC's new projections to be released with the December policy statement. Yellen's comments, and remarks in the minutes, that low price pressures might be more persistent, have traders holding off pricing in a more aggressive normalization path.