Traders price in 26% chance that fed-funds rate can get to 5% in March


Fed-funds futures traders now see a decent chance that U.S. policy makers will lift borrowing costs to a range between 4.75% to 5% by March, versus the current level between 3% and 3.25%. They see a 26% chance of such a scenario, up from 19% on Wednesday and zero likelihood a month ago, according to the CME FedWatch Tool. Market expectations for further aggressive moves by the Federal Reserve picked up momentum after Wednesday’s policy announcement. Investors were reeling from the developments, with all three major U.S. stock indexes DJIA, -0.46% COMP, -1.43% SPX, -0.86% lower in the first hour of trading. Meanwhile, investors aggressively sold off government debt, pushing the 2-year rate TMUBMUSD02Y, 4.139% further above 4%.

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