It seemed like just last week we were debating the potential for the Fed to raise rates. And then today we have Fed officials discussing the potential for more QE. What a manic world. One little 7.5% decline in the stock market and people start assuming that the world is falling apart.
Anyhow, another way of visualizing the market’s perception of future easy Fed policy is to look at the Fed Funds Futures Curve. The red line in the chart below shows the curve from 6 months ago relative to the blue line which is the updated curve. As you can see, 6 months ago the market expected a rate hike in early 2015. But that rate hike has now been bumped out to November 2015.
I’ve been pretty vocal about my view that the Fed isn’t raising rates any time soon. And I think that will continue to be the right call well into 2015.