Odds of Rate Hike This Year? A Measly 12%

federal reserveAccording to the latest data from The CME Group, traders are pricing in an increasingly small chance that the Federal Reserve will lift interest rates this year.

Based on 30-Day Fed Fund Futures pricing, the odds of a rate hike fell from a prior level of 18% last week, to only 12% this week.

Data: The CME Group

This news comes despite last week’s Fed meeting, where the agency of economists painted a rosy picture of the U.S. economy and noted that lifting rates wasn’t off the table. Traders quickly called their bluff, however, continuing to care more about what the Fed does rather than what it says.

The markets also didn’t blink when Bank of New York President William Dudley said on Sunday that we shouldn’t rule out an interest rate hike this year. Investors have heard this story before, however. Every year (if not every month), a parade of analysts, economists, and regulators come out with comments that support raising rates. Yet month after month, year after year, rates stay low.

The iShares Barclays 20+ Yr Treasury Bond ETF (NASDAQ:TLT) fell $0.64 (-0.45%) to $140.92 per share in premarket trading Monday. The TLT has risen 17.4% year-to-date, nearly tripling the return of the S&P 500.


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