The Fed March rate hike is back on the table

March Fed rate hike odds as represented by CME Group 30-Day Fed Fund futures prices have jumped from 31% yesterday to 62% today.

The sharp rise is due to hawkish comments from Fed’s William Dudley, Robert Kaplan and John Williams. NY Fed President William Dudley expressly stated that the case for a rise in interest rates has become “a lot more compelling”.

Moreover, with rate hike bets above 60%, the rate hike looks even more compelling. Traditionally, the Fed has hiked rates only after probability was at least above 60%.

The rate hike bets could tumble if Trump does not detail his fiscal plan/falls short of market expectations, leading to risk-off action in the markets.