Fed funds futures are flat to lower ahead of Wednesday's FOMC
Fed funds futures are flat to lower ahead of Wednesday's FOMC announcement. Trading is on the lackluster side. A rate hike is as near a done deal as can be. Of most importance will be Fed's dot plot and economic projections, which will help set market expectations for the normalization path in 2018 and 2019. The last dot plot from September showed three tightenings were estimated for next year, and analysts suspect policymakers will maintain that view, while also holding on to a presumed 2.75% peak rate. There is some market speculation that the FOMC might trim the estimate to two hikes, and indeed, futures aren't even fully priced for such. Meanwhile, there will be tremendous turnover at the Fed next year, with the new chairman Jay Powell, a new VC after Dudley retires, a couple of more governors, along with the usual rotation of voting presidents, with Mester, Bostic, Williams and Barkin coming on board.