MarketPR
Federal Reserve interest rate swaps have pulled back from fully pricing a rate increase at the September policy meeting, a change in derivatives positioning that widens the range of outcomes traders are now working with.
When a move is fully priced in the swaps market, the implied probability has reached a level the market treats as near-certain. September has moved out of that territory.
What the swaps signal means Interest rate swaps are among the most liquid instruments for tracking where the market expects the Federal Reserve to take its benchmark rate.
A fully priced hike tells you the derivatives market has effectively removed alternative outcomes from the September table.
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