July 31Traders 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.