- Traders in the fed funds market are increasing short positions, betting on a Federal Reserve rate hike as early as July.
- Interest rate swaps now price in approximately nine basis points of a quarter-point hike, representing a 36% probability.
- The shift in market sentiment follows a focus on price stability by the new Federal Reserve Chairman, Kevin Warsh.
Quotes
“Traders in the fed funds market are ramping up bets that the Federal Reserve will start raising interest rates as soon as July, a previously unthinkable move that risks being derailed by a series of economic data.”