Traders Lose Faith In Fed - Shift Rate-Hike Bets To December

While a June rate-hike is baked in the cake no matter how badly the economic data that The Fed is "dependent" upon collapses, it appears traders are losing faith in the rest of the year as the odds of a hike occuring in December is now above that of September (as both drop to around 25%).

As economic data has crashed since The Fed hiked rates in March, so the markets expectations has dropped to just 1.44 rate-hikes this year (one in June guaranteed), well below The Fed's guidance of 2 more rate-hikes minimum...

 

But perhaps more notable is the shift in timing as September odds tumble and December moves ahead...

 

And Eurodollar options traders are increasingly positioining for The Fed to disappoint...

 

But banks don't care.

Comments

NAV wisehiney Wed, 06/07/2017 - 21:36 Permalink

After the 90th month of playing the ZIRP shell game, hasn’t it struck you yet that there is no pea, I mean fed funds rate increase, under the shells?  Don’t you know after these past 90 months that the game is fraudulent and that the Fed is chaired by nothing but confidence tricksters conning folks out of their hard earned money?. Sure, Ben and Janet have allowed a few now-you-see-it-now-you-don’t wins of .25% to keep the scam going but it’s all sleight of hand perpetrated by swindlers. Bernanke must be amazed that the game has run so long. Bernanke himself acknowledged the hit in a 2011 press conference: “We are quite aware that very low interest rates, particularly for a protracted period, do have costs for a lot of people. They have costs for savers. We have complaints from banks that their net interest margins are affected by low interest rates. Pension funds will be affected if low interest rates for a protracted period require them to make larger contributions. So we are aware of those concerns, and we take them very seriously. I think the response is, though, that there is a greater good here, which is the health and recovery of the U.S. economy.” And just to prove there's a sucker born every minute, those tiny Fed hikes are not actually rate hikes at all, but the opposite. As Chris Martenson puts it: " In the past, when the Fed ‘hiked rates’ what it actually did was drain money from the system. Money out = interest rates up. “Now when the Fed hikes rates it removes zero money in the system, and this is why a rate hike is not actually a rate hike at all, but the opposite because it leaves 100% of the money in the system but raises the amount that banks and other financial institutions can charge you for new loans and outstanding credit.” That’s why,  after the Fed’s recent “hike,” the earned  interest rate on your new CD went down but the floating interest charged on your old equity loan went up.Unfortunately, there are no federal game-show regulations to warn the people that the Fed's confidence game is illegal, a scam perpetrated upon the people by the U.S. Congress.

In reply to by wisehiney

HRH Feant2 Wed, 06/07/2017 - 20:42 Permalink

So chances are good that I can get another refi loan with a generous lender credit and get my 30-year loan down to 2.25%? WOO HOO! Bring it on!

So far: bought house with 4.25%, refi'd down to 3.5%, refi'd in October down to 2.8% and my mortgage (PITI) is less than $1000 a month. If I can get a refi down to 2.25% and PITI down to $850 a month? That would be sweet!

2_legs_bahhhhhd HRH Feant2 Wed, 06/07/2017 - 23:05 Permalink

I hope you aren't taking investment advice from Susie Ormand.

When you refinance a mortgage you should be throwing down the maximum lump sum, and keeping your payments the same as before. This will knock years off your term. It doesn't matter what the interest rate you have, every dollar you pay those rats in interest, its a dollar you will never see again. Starve em out

In reply to by HRH Feant2

Overleveraged_… Wed, 06/07/2017 - 21:46 Permalink

The Fed can hike, or it can not. Doesn't matter. There is still $200+ Billion of newly created money at central banks all over the world that will be buying up tons of assets, including US Stocks. The President's Working Group on Financial Markets knows the deal, and is at the standby ready to intervene if anything goes wrong.Folks, this is the most predictable market of all time. I am thinking 3000 S&P 500 by year end, and 4500 by Q1 2019.

alphasammae Thu, 06/08/2017 - 01:58 Permalink

traders (hedge funds) lose faith in the FED so opted away from digital paper gold and silver manipulated FED trading and instead are going for BITCOIN the next financial bubble!

Russdiamon Thu, 06/08/2017 - 10:14 Permalink

This guy I follow has been calling for a drop/top around this time for awhile now. That june rate hike could definitely play in to it. Though I'm just glad I have him to follow for timing the market. Has helped me out quite a bit in the past. I definitely recommend taking a look at what he has to say.check this out