Rate swaps see 50% probability of Fed hike in June

(Bloomberg) – US interest rate traders raised the odds that the Federal Reserve will raise rates 25 basis points in June to nearly 50-50.

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Interest rate swaps that refer to the June meeting of the Federal Open Market Committee (FOMC) forecast an increase of around 12 basis points. For the September meeting, they discount a 100% probability of a hike, with a second hike in February 2023.

The yield on the two-year Treasury bond rose 4 basis points on Friday, surpassing 0.40% for the first time since March 2020. In the case of Eurodollar futures, rates have risen by as much as 10 basis points, which which also reflects increased expectations of Fed rate hikes. Movements accelerated after the release of data showing that retail sales rose more than expected in September.

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Original Note:

Fed Rate Hike in June Has Become a Coin Flip as Yields Climb

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