Courtesy of Mish.
As of September 10, the CME has the of a September hike by the Fed at 24%. Bloomberg says the probability of a move is 28%.
Bloomberg Rate Hike Odds
CME Fedwatch Odds
Both Models Wrong
What’s wrong with both models is they still presume a quarter point hike.
Neither Bloomberg nor the CME allows for the possibility of a Fed hike to precisely 0.25% or to a smaller tighter range.
Given the effective Fed Funds Rate is 0.14% (see upper right of Bloomberg chart), a setting the rate to a flat 0.25% from the current range of 0.00-0.25% (now at 0.14%), would be both a “move” and a “hike”.
Tighter Range
The Fed could also use ranges as Bloomberg and CME imply, but target ranges in 1/8 of a point increments rather than 1/4 point increments.
…
