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Fed funds futures are sinking as safe-haven flows reverse

Fed funds futures are sinking as safe-haven flows reverse and as signs of inflation are appearing. That is supporting expectations that the FOMC will remain on track for more tightenings this year. Yesterday's FOMC minutes also confirmed the slight hawkish tilt to the policy path, though that was already revealed with the dot plot at the March 20, 21 meeting. Though that suggested risk for 4 hikes this year, the futures are only pricing in a total of 3 tightenings for 2018. Implied rates are showing about 80% risk for another 25 bp rate increase at the June 12, 13 FOMC, while the chances for a third increase this year by December are closing in on 70%. Analysts're still forecasting three tightenings this year, with the next move in June.


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