Waller's Hawkish Remarks Raise Rate Hike Probability to 40% This Month
Due to the hawkish comments from Fed's Waller and the surge in oil prices following the closure of the Strait of Hormuz, the probability of a rate hike this month reached the mid-40% range in the FFR futures market on the 13th (local time). The futures market reflected a higher likelihood of an increase compared to the previous session.
On the 13th (local time), Fed Governor Christopher Waller stated during a speech at a New York event that a rate hike could be possible "in the near term" depending on the price index to be announced soon. The futures market reacted sensitively on the same day as this statement was made.
According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds rate (FFR) futures market reflected a probability of a rate hike in the mid-40% range during the afternoon session in New York on the 13th. In the previous session, this was in the low 30% range.
The backdrop that the market paid attention to alongside the speech was the news of the international oil price surge due to the closure of the Strait of Hormuz. Rising oil prices are mentioned as a factor connected to price indicators and the Fed's rate decision.
This trend is notable as the futures market and the speech's message influenced each other simultaneously. This represents a case where the remarks from Fed officials coincided with shocks in the real market on the same day.
The content of the speech shows that uncertainties regarding the rate path have increased before and after the price index announcement. Changes in the futures market's betting are interpreted as signals of a reassessment of short-term rate expectations.
Sources: 연합인포맥스
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