Looking at Fed Funds futures contracts, it would appear that the fixed income market has ruled out a June rate hike but is coming back to the idea of a 2015 lift-off. Currently June fed funds future are spot on the current effective fed funds...
Not even a month ago, we wrote about how it looked like the market was pricing in two rate hikes in 2015 and four in 2016. Well, apparently a lot has changed (at least regarding expectations) since then....
According to Fed Fund futures, the market currently expects about 2 rate hikes by December 2015 (assuming the Fed raises rates by 25 basis points each time). Fed Funds futures is pricing the Fed Funds Rate at 54 basis points by December 2015....
Since January 15th, 5-year TIPS derived breakeven inflation has increased 23 basis points from 105 basis points to 138 basis points. 10-year TIPS derived breakeven inflation has increased 16 basis points during this time and 30-year TIPS derived breakeven inflation has increased 8 basis points...
On October 16th, the US 10-year treasury yield closed at 2.15% and the US 30-year treasury yield closed at 2.93%. Since then, the 10-year has widened by 21 bps and the 30-year by 14 bps. Interestingly, the move up in yields has not been due...
