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Based on Steve Poser's model, the Fed Funds market is predicting a
24% chance of a 25 basis point Fed rate increase tomorrow.
> > snip <
> > The whole calculation can be complex, but in this case it is pretty
> > simple. The July futures trade at 94.435. Since there is no meeting
> > in July, if the Fed leaves the funds rate unchanged, fair value for the
> > contract is 94.50. If the Fed increases on 28-June, the fair value is
> > 94.25. We get this by subtracting the funds rate from 100. The
> > current rate is 6.50%. A 25 basis point hike would be 6.75%. The
> > current odds then are (94.50-94.435)/(94.50-94.25) =6.5/25.0 =
> > 26%.
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