A cause for pause

If you just go by the headlines, it would certainly seem like it:

• Harker: I am in the camp that we can skip a meeting
• Feds Jefferson: Skipping a rate increase would allow Fed officials to see more data
• “Fed Whisperer” Timiraos says the FOMC is likely to hold interest rates steady in June

It may have been a coincidence but in central bank language, that is hardly ever the case. It appears to be that Fed policymakers are starting to pick a side but a lot will still come down to the big data in the weeks ahead.

The first will be this week's US non-farm payrolls and then more importantly the US CPI data on 13 June, which will come just a day before the next FOMC meeting.

But keep in mind that there is the Fed blackout period (starting 3 June) to consider, so if policymakers will want to let their voice be heard then they will have to communicate so accordingly beforehand. And this certainly does seem like that but let's see whether there will be more later in the day.

Fed funds futures Fed funds futures Fed funds futures are financial derivatives that are used to speculate on or hedge against changes in the federal funds rate, which is the interest rate at which banks lend money to one another overnight. The contract is based on the effective fed funds rate, which is the average interest rate that banks charge other banks for overnight loans. The value of the contract changes as the market's expectation for the future fed funds rate changes.In the Fed funds futures market, these are traded as a Fed funds futures are financial derivatives that are used to speculate on or hedge against changes in the federal funds rate, which is the interest rate at which banks lend money to one another overnight. The contract is based on the effective fed funds rate, which is the average interest rate that banks charge other banks for overnight loans. The value of the contract changes as the market's expectation for the future fed funds rate changes.In the Fed funds futures market, these are traded as a Read this Term had previously shown odds of a 25 bps rate hike be at 70% yesterday but that has now flipped over to being 61% odds of there being no change to interest rates in June. That said, it hasn't really impacted the curve too much though: