imported post
Nightmover wrote:
If the FOMC raises by a 1/4 point next Tues, how will that most likely effect the F Fund?
Dell
The 1/4 is already expected. What bond investors are looking for is a change in the wording of the statement.
Language
Gains this week were fueled in part by speculation that Fed policy makers will alter the language of their post-meeting statement next week to suggest the series of rate increases is near an end, CSFB's Li said.
The odds that the Fed will raise the fed funds target at each of its next three meetings slipped to 56 percent yesterday from 66 percent a week earlier. April futures on the federal funds rate yielded 4.64 percent, pricing in 14 of the 25 basis points by which the April rate would rise if the central bank were to raise the target to 4.50 on Jan. 31 and 4.75 on March 28. A week earlier the contract yielded 4.665 percent.
``If the Fed keeps the language unchanged, there could be some selloff,'' especially in shorter-maturity Treasury notes, Li said.
Minutes of the central bank's Nov. 1 meeting showed some policy makers were concerned about the ``risks of going too far'' with rates and discussed the need to change their outlook ``before long.'' Since May 2004, Fed statements announcing its decisions on rates have said policy makers expect to raise rates at a ``measured'' pace.
Code:
To contact the reporter on this story:
Elizabeth Stanton in New York at [email]estanton@bloomberg.net[/email]
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