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

To: Investor2 who wrote (27397)	3/12/2010 3:57:11 PM
From: Real Man	Read Replies (1) \| Respond to of 71456

Implied probability for 0.0-0.25% Fed funds rate range is nearly 100% for March and April, while it is 95% for June meeting. This is the current Fed funds rate range, which means the market thinks it is nearly certain that the Fed will stay put until June. You can also see what the market thinks about the Fed here: cmegroup.com Take a Month, say, May 2011, and the contract price: 98.870. Subtract the number from 100: 100 - 98.87 = 1.13 The result, 1.13% is what the market thinks the rate gonna be in May 2011, either 1% and 1.25% with nearly equal probability. Sorry for these simple details. The market does not usually get the rates right when the date is this far out, but 3 months out it is usually correct. If it is wrong, it will adjust sharply -g- The red ink you see in Fed funds futures today means that the market is pricing in tougher Fed. The market thinks the Fed will start hiking toward the end of the Summer, and do it very slowly. Due to all derivative adjustments lately, the market is telling the Fed what to do and the Fed almost never revolts. Some argue the Fed is really not necessary due to their compliance with the market, let the market set the rates. -g-