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Strategies & Market Trends : The coming US dollar crisis -- Ignore unavailable to you. Want to Upgrade?

To: Giordano Bruno who wrote (3578)	1/23/2008 9:10:20 PM
From: Real Man	Read Replies (1) \| Respond to of 71454

Read it somewhere around www.dailyfx.com, lost the article, but here is Mr.Market. He is a better judge than those writers anyhow. -g- quotes.ino.com 100-97.15=2.85% current rates = 3.50%. Mumbo jumbo = 65 bp, closer to 75 than to 50. Still somewhere in between, more like 60bp now. -g- So, they are pricing 50 with 60% probability, 75 with 40%. -g- 4. How can fed funds futures be used to gauge expectations of the federal funds rate? This is best illustrated by example. On October 31, 2005, the fed funds futures contract with a February 2006 delivery date of had a settlement price of 95.55. Abstracting from transaction costs, a purchaser of this futures contract at this price would profit if and only if 100 minus February’s average effective fed funds ended up above 95.55. This would happen if February’s average effective fed funds ended up below 4.45%. Similarly, someone selling this futures contract at a price of 95.55 would profit if the average February effective fed funds ended up above 4.45%. clevelandfed.org