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Strong NFP Boosts Fed Rate Hike Expectations

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Expectations for Fed rate hikes in 2016 rose Friday after a jobs report that came in far ahead of Wall Street expectations.

Fed funds futures indicated a 52 percent chance of a rate hike in March, according to the CME Group’s FedWatch site.

After the turmoil in China’s markets earlier this week, those expectations had dropped into the low-40s range, and futures were instead indicating the first better-than-average chance of the next rate hike in June.

RBS said its interpretation of overnight index swaps suggested the market was now pricing in one rate hike and a 90 percent chance of a second hike this year. There had only been a 70 percent expectation for a second hike as of Thursday.

Bank stocks like JPMorgan and Citigroup, which have suffered this week on fears that interest rates would not rise much this year, rallied sharply in pre-market trading.

via CNBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza

@alfonso_forex

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