Interest Rates - Prediction?

....sorry to be pedantic but the fed funds futures contract by definition gives a future expectation of the daily weighted average Fed Funds effective rate for a given month.... so, yes, it gives a very strong indication of the market's opinion of interest rates in the future....
 
Fed funds front month are weighted depending on how long they have left to expiration, so where M6 is trading on the 15th is not as true a picture of what the market thinks is going on than say, where M6 is trading the 1st of June, gets worse towards expiration. Not worth explaining the settle right now. ED spreads can give you a decent picture.
 
....my post was to respond to the question of the previous post...." Does it [FF futures contract] give any indication about interest rates? i was just asserting YES - that the essence of the contract was to give an indication of the average fed effective rate for the stated month.... if you bothered to read the tread you would have realized that it was not about the specific details of this contract (we can all type www.cme.com) - and thank you so much for not "bothering" to go into more detail and sparing me the annoyance, as i am certain that i may know just a little bit more about these futures thank you, given that i traded them institutionally for 12y.....

btw are you one of those o.c.d. people? go hang out with monk anal boy....
 
Quote from johnself11:

....my post was to respond to the question of the previous post...." Does it [FF futures contract] give any indication about interest rates? i was just asserting YES - that the essence of the contract was to give an indication of the average fed effective rate for the stated month.... if you bothered to read the tread you would have realized that it was not about the specific details of this contract (we can all type www.cme.com) - and thank you so much for not "bothering" to go into more detail and sparing me the annoyance, as i am certain that i may know just a little bit more about these futures thank you, given that i traded them institutionally for 12y.....

btw are you one of those o.c.d. people? go hang out with monk anal boy....
More...

Hey, didn't mean to attack you or anything, I didn't even see your post before I made my post, I just wanted to point out that FF have a different settlement than you might expect, and that would affect the way you'd look at the front month as an indication of fed movements.

But I'm thinking something's off anyway, seeing as how somebody who's traded FF for 12 years should know they trade on the CBOT, not the merc.
 
I suspect that things are a lot worse than anyone expects and that rates will continue to rise while we have inflation across the board and a hard landing in the housing market. Its nice that the housing bubble is only in "small geographic area's" but when those small geographic areas have 2/3 of your population and 3/4 of your wealth, it matters a lot more than "they" want you to think. My own opinion is that we see mortgage rates above 8%, possibly above 10%, with in the next few years.

Brandon
 
Quote from Digs:

Sorry... short term rates may go up further but the boys in the BOND market will be buying 30yrs very soon , and we will be back to an inverted yield curve.

So mortgage rates will flat to trending down, depending on your term length.

Why buy bonds, safety assets, as investors sees that the USA housing market is not heading for a safe landing. Bad housing, means bad consumer spending, bad spending means bad GDP and corporate profits will slump, unemployment will jump.

Ask your self, do you really think the FED can organise a soft landing in the housing market with world commodities hitting new highs. The FED must fight inflation. The must raise short term rates to soak up liquidity.

Liquidty has come from refinancing and the FED pumping monies into the banking system, and now they must reverse.
More...

Exactly, a housing led slowdown or recession. Unlike the equity led recession after the stock market bubble 2000, the consumers are not here to the rescue because they have too much debt. Highly indebted consumers can only mean one thing, less potential for consumers to borrow more. This should ease inflation pressure. If house prices correct as significant as I think they will, the baby boomers will start to panic save (wealth effect and approaching retirement), that should further ease inflation pressure. The fed will have to cut short term rates to get things going again. Panic saving and lower short term rates are probably good for bonds and stocks.

So even though I seem to agree with u on the housing and bond issue, I disagree on short term rates and inflation. Fascinating how many different conclusions it’s possible to reach in economics. Do u see stagflation?
 

Attachments

Thanks guys.

I always listening to analysts saying that "there are 70% chances the Fed will raise rates on next meeting". Where do they get the figures? From the Fed Funds Future contracts? If yes, how to "read" them? What are the chances now of the Fed raising IR at the end of June?
 
Attention : Voodoo-king

People are underestimating the FEAR of depreciating assets when consumers have so much debt.

The psychological swing from BULL to BEAR, banks will get very conservative, margin calls on mortgages will be common.

Sure, what you say is correct, but softer inflation is a fine line away from deflation, and deflating asset values.

I think the high personal debt levels secure the view of deflation, not stagflation.

Thank Greenspan for that.
 
You must log in or register to reply here.
Back
Top