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.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.