Traders remain hesitant about Fed rate hike expect

Aihucha reported on October 7: U.S. federal funds futures show that the probability of another interest rate hike in November is about one-third, up from one-fifth yesterday. While the odds of another rate hike have increased, they are modest, suggesting traders remain skeptical about whether another rate hike is necessary with financial conditions so tight. It's no wonder the stock market is still rising. This year's FOMC alternate member and San Francisco Fed President Daly said yesterday that the slowdown in wage growth is a glimmer of hope in the latest report, which will be welcomed by the Fed, while the recent surge in yields reduces the need to raise interest rates again. Former Fed Vice Chairman Clarida agreed. Daly also said the recent tightening in bond markets is equivalent to about one interest rate hike. Since their comments, yields have climbed further. The historic sell-off in the U.S. Treasury market has pushed financial conditions to their most tense state since the peak of the Federal Reserve's hawkish policy in late 2022.