US FED has decided to stand its rate at 5.25% to 5.5% and signaled one more hike before year end, tanking almost every asset index except the US dollar on last night. Many are looking forward to the future rate projection but some of market views didn’t agree with the one more hike.
According to the US Federal open market committees’ dot plot, it showed US FED would hike the rate at least one more time before the end of this year at higher rate than 5.5% but below 5.75%. Next year’s plots are scattered across over 4.75% but under 5.5%. And for 2025, it’s even more scatter from over 3.25% but under 4.25%.
The near-term contracts of US Treasuries note, and bond Futures have been falling since last night, signaling the higher rate expectation as 2-year note index sharply dropped from 101.5 monthly average level to 101.2, which confirmed the direction of one more rate hike.
Meanwhile, the longer-term Fed Fund Futures expected no more hike at the lower rate as December’23 contract trading at the yield of 5.4%, December’24 at 4.7% and December’25 at 4.4%.
On the other hand, CME FedWatch Tool predicts the standing rate between 5.25% to 5.5% at the odd of 53.4% at the end of 2023, also between 4.5% to 4.75% with 24.7% odd and 4.75% to 5.00% with 27.9% odd at the end of 2024.
