Traders continue to see first Fed rate hike in late 2014

July 31 Wed Jul 31, 2013 2:18pm EDT

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July 31(Reuters) - Traders of short-term U.S. interest-rate futures continued to price in a first rate hike from the Federal Reserve in late 2014 after the Fed offered no hint it plans to soon trim its massive bond-buying program.

Some Fed funds futures contracts maturing in 2014 pared losses, but most were little changed after the Fed decided at its two-day policy to keep buying bonds until the labor market outlook improves substantially. The contracts, tied to the Fed's policy rate target, rise in price when traders see a bigger chance of a later Fed rate hike.

Futures prices suggested traders see a 52 percent chance of a rate hike in December 2014, with probabilities increasing through the first half of 2015, according to CME Group's Fed Watch, which generates probabilities based on the price of Fed funds futures traded at the Chicago Board of Trade.

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