Futures signal traders now see Fed rate hike in 2016

New York (Oct 15)   Short-term U.S. interest rates futures jumped on Wednesday as disappointing data on domestic retail sales and producer prices stoked bets that the Federal Reserve might not raise rates until early 2016.

As of midday Wednesday, the fed funds contract for March 2016 delivery was up 19 basis points at 99.47 after hitting a contract high of 99.535.

This price level implied traders anticipate the U.S. central bank would not move away from its near zero rate stance until end of the first quarter in 2016.

Only a month ago, fed funds futures had suggested traders priced in almost a 50 percent chance of a Fed rate increase as early as June 2015.

Source: Reuters