CBOT's Federal Funds Futures
The Chicago Board of Trade's (CBOT's) 30-Day Federal Funds Futures gives the market's estimate of future short-term interest rates. (Take 100 minus the price to get the expected Federal funds target rate, then divide the difference from the current rate by 0.25 to get the percent odds of a move.) On Friday, the chances of an interest rate hike by the Federal Reserve during the remainder of 2008 went from near zero to a 100% chance of a move by December. Expectations of higher rates alone should begin to ease some of the intense fee waiving pressure being felt by the most conservative money market funds, and indeed our Money Fund Intelligence Daily showed 1-day yields inch up on Friday. But it remains to be seen whether expectations for higher rates last. (See also, WSJ's "Fed to Show Some Reserve on Rate Moves".)
