By Richard Leong
NEW YORK Nov 8 U.S. short-term interest rates
futures fell on Friday after data showed surprisingly strong
U.S. jobs growth in October, reinforcing expectations the
Federal Reserve would raise its policy rate by the middle of
The unexpectedly large increase in hiring last month stunned
many economists and investors who had expected a meager figure
due to the a 16-day government shutdown that furloughed hundreds
of thousands of federal workers and contractors.
The Labor Department said U.S. employers added 204,000
workers in October, far more than the median forecast of 125,000
among economists polled by Reuters. The September figure was
upgraded to 163,000 from the originally reported 148,000.
"The rates market was pricing in a lot less rate hikes
before the data," said Jim Lee, head of short-term markets and
futures strategy at RBS Securities in Stamford, Connecticut.
The April 2015 federal funds contract fell 3.0 basis
points to 99.725, while the June 2015 contract declined
3.5 basis points to 99.655.
These levels implied traders expect a 47 percent chance the
U.S. central bank will hike rates in April 2015 and a 55 percent
chance of a rate hike in June 2015, according to CME Group's
FedWatch program which calculates traders' expectations on the
changes to Fed's policy rate.
On Thursday, the April 2015 fed funds contract suggested a
43 percent chance of a rate hike and the June 2015 contract a 51
The latest jobs figure, while it shored up expectations of a
Fed rate hike in mid-2015, caused traders to speculate whether
the Fed might pare its current $85 billion monthly bond
purchases at its December meeting, analysts said.
Prior to October payroll data, most economists reckoned the
central bank would not consider tapering its third round of
quantitative easing until March 2014 at the earliest.
"It's refueling the idea the Fed might taper in December,"