After the disastrous performance of the stock market on Christmas Eve, investors could definitely use some good news. It’s not a massive value jump, but it’s something; according to the rate futures market, the Federal Reserve will not be enacting any more interest rate hikes for the foreseeable future.
The federal fund futures contract managed to pick up 10.5 basis points in its price on Monday. The contract is typically observed as a benchmark of where the Fed’s overnight lending rate will be by the end of the next year. The increase gave the contract an implied yield of 2.41 percent. This is within the Fed’s current range of 2.25 to 2.50, the range it was raised to last week. Fed officials also released their personal projections of where the funds rate will end for 2019. Among 17 policymakers, the median hovered between 2.75 and 3 percent. Indications are currently pointed toward the Fed staying on course to winnow its holdings of Treasury bonds and securities. All of this helped to facilitate a selloff of stock and corporate debt.
Last week, rate futures also projected the Fed to begin reversing its current trend of rate hikes as early as 2020.
