5/17/2017, 7:23 PM (Source: TeleTrader)
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Bets on policy tightening in FedWatch dip to 69.2%

Four weeks ahead of the Federal Open Market Committee's meeting, market participants eased expectations of a rise in interest rates in the United States. Parallel to a jump in Treasuries and a significant weakening in the dollar amid political instability in Washington, the probability for a tightening of a quarter of a percentage point came in at 69.2% on Wednesday. The remainder pointed to no change, a reading of the FedWatch tool showed, according to the underlying futures prices. The level indicating a hike compares to 73.8% from the previous session and 87.7% from May 10.

Bets that the benchmark rate will stay flat at between 0.75% and 1% by the end of the year increased two percentage points from the last close and 8.8 points on the week, to 13%. Expectations for the Fed funds rate to rise only to the 1% to 1.25% range are at 42.7%, against 34.4% for the instrument to be between 1.25% and 1.5%. Another 9.3% points to one quarter-point notch higher, and the probability for the interest rate to be raised to between 1.75% and 2% as of December was 0.7%. 

Policymakers from the Federal Reserve led by Chair Janet Yellen will convene on June 13 for two days and issue a decision according to perceived state of the world's largest economy. 

Baha Breaking News (BBN) / IT