Fed Rate Futures Downgrade the Likelihood of an Inter-Meeting Hike

(Bloomberg) -- The fed funds futures market has repaired the damage caused Thursday by comments from St. Louis Fed President James Bullard, who said he was open to the idea of inter-meeting rate hikes. 

The February contract is back to a price of 99.90, implying a rate of 0.10%. That level was reached earlier Thursday, after the hotter-than-expected January CPI report. After Bullard’s comments were reported the contract fell to 99.845, pricing in a 30% chance of an inter-meeting hike.  

A record 307,494 February fed funds contracts changed hands Thursday in heavy selling before and after Bullard’s hawkish comments. Open interest rose by 33,150. 

Bloodbath in Fed Funds Futures Trading With Record Volumes

The expected release by the New York Fed at 3 p.m. New York time of its final monthly schedule of Treasury purchase operations has the potential to dispel any remaining belief in an inter-meeting move, as Fed officials have said they’re unlikely to raise rates before that program concludes.  

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