CME Group IncFed hike expectations drive heavy trading in FedWatch-implied rate futures, boosting CME's derivatives volumes.
The Federal Reserve's September policy meeting began Tuesday at 10:30 AM ET, with markets overwhelmingly expecting the central bank to raise interest rates by 25 basis points when it issues its decision Wednesday at 2 p.m. ET. Such a move would be the Fed's first increase in the fed funds rate since 2023, when the Jerome Powell-led central bank concluded its post-pandemic hiking campaign. Inflation has now remained above the Fed's 2% target for more than five years, with the war in the Middle East serving as the latest driver of higher prices. As Fed Chairman Kevin Warsh said in his Jackson Hole Symposium speech in August, "We have work to do." Traders were pricing in a roughly 92.7% chance of a hike, according to CME Group's FedWatch tool, though a hold isn't entirely off the table. Markets will also scrutinize the Fed's Summary of Economic Projections, the so-called dot plot, for clues about monetary policy in the next few years.
CME Group IncFed hike expectations drive heavy trading in FedWatch-implied rate futures, boosting CME's derivatives volumes.
The Fed is expected to raise the fed funds rate by 25bp, lifting the Effective Federal Funds Rate.
An expected Fed rate hike pushes the 10-year Treasury yield higher.