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CME Fedwatch says 99.8% Odds of a Fed Funds Increase

Its already baked into the cake–one week from today–a 1/4% rate hike next week from the FOMC. I think we already knew that was the case – many of us feel the same way – the FED isn’t really happy that they have been unable to get common stocks to fall and unemployment up. I don’t think they necessarily want a recession, but they just want some ‘respect’. To these jokers that means everyone should panic and sell all their equities–while at the same time jobs are plentiful (still) and wage demands are being met continually.

Only 1 month ago the CME Fedwatch tool had a 74.4% chance of a rate hike – now it is at 99.8%—I guess everyone is in agreement for once. Economic data seems to be a tiny bit softer, but certainly not indicating severe distress – today we had housing numbers – a bit lite of expectations, but hardly a disaster.

Bank earnings while generally down from a year ago have been acceptable – deposits are not fleeing as banks are offering competitive rates. Commercial real estate has held up kind of – although I think the worst is yet come come on various refinancing of properties in particular in the office sector – insurance company’s and pension funds will be taking hit in this area.

Well let’s sit back and see how things flesh out over the next week – a more importantly how the Fed Chair Powell presser comes off after the rate hike. I suspect more of the same – inflation remains too high and they stand ready to raise rates further.

4 thoughts on “CME Fedwatch says 99.8% Odds of a Fed Funds Increase”

    1. G., as you may have seen, a couple months ago it was announced that Triton is going to be acquired by Brookfield Infrastructure.
      I was holding both the C and E Series and given Brookfield’s reputation I ran for the hills and sold both positions as soon as they were in the black.
      My opinion, FWIW, wait until there is clarity what, if anything, will happen to the outstanding Triton Preferreds.

      P.S. Aug 24 is the special meeting where the acquisition is to be voted on.

  1. I’m waiting to see where CD rates end up next week. Rates seem to have been flagging recently. (Likewise MMFs. Noticed one MMF slipped by 0.01%.) Totally illogical, but I am not convinced that the upcoming Fed 0.25% bump will result in a 0.25% jump in CD rates.

    Also wondering where T-bills will end up. I am thinking that we may be back to a period where T-bills are better than similar term CDs. T-bills are back in demand, paying rates above Fed overnight rates where the nervous were hiding during the debt crisis. There’s has been about a ~1 trillion drop in overnight Fed balances since December. (Market Watch)

    Funny to be grumbling that 5.50% and up is not readily available when 0.05% was a high yield about a year ago. The good side is, lower rates are slowly reviving my preferred portfolio just like a July thunderstorm perks up a browned out lawn. Just my opinion.

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