Prime Rate

also known as the Fed, National or United States Prime Rate,
from the interest-rate specialists at www.FedPrimeRate.comSM

Thursday, December 15, 2016

Odds At 96% (Extremely Likely) The U.S. Prime Rate Will Remain At 3.75% After The February 1, 2017 FOMC Monetary Policy Meeting

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As of right now, the investors who trade in fed fund futures have odds at 96% (as implied by current pricing on contracts) that the Federal Open Market Committee (FOMC) will vote leave the target range for the benchmark fed funds rate at 0.5% - 0.75% at the February 1ST, 2017 monetary policy meeting (extremely likely.)

The current Prime Rate, which went into effect on December 15, 2016, is 3.75%.

NB: U.S. Prime Rate = (The Fed Funds Target Rate + 3)

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The Trump Effect still has capital moving out of the safety of American government debt, which is driving up yields.  The yield on the Ten-Year U.S. Treasury Note continues to surge higher, which, in turn, will cause mortgage rates to rise.

Here's a recent history on the ten-year yield:

  • December 7, 2016: 2.34%
  • December 8, 2016: 2.40%
  • December 9, 2016: 2.47% 
  • December 12, 2016: 2.49% 
  • December 13, 2016: 2.48% 
  • December 14, 2016: 2.54%
  • December 15, 2016: 2.60%

Let's hope all the Wall Street enthusiasm about Mr. Trump's rise to the White House is well placed.

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Influencing the latest odds include readings on Inflation, Retail Sales, Jobs and Industrial Production.

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Current Odds

  • Current odds the U.S. Prime Rate will remain at the current 3.75% after the February 1ST, 2017 FOMC monetary policy meeting: 96% (extremely likely), with remaining odds -- 4% (extremely unlikely) -- that the FOMC will opt to raise short-term rates by 25 basis points (0.25 percentage point.)

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  • Current odds the U.S. Prime Rate will remain at the current 3.75% after the March 15TH, 2017 FOMC monetary policy meeting: 74.7%  (somewhat likely), with remaining odds --  25.3% -- that short-term rates will be at least 25 basis points (0.25 percentage point) higher.

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  • Current odds the U.S. Prime Rate will remain at the current 3.75% after the May 3RD, 2017 FOMC monetary policy meeting: 60.4%  with remaining odds --  39.6% -- that short-term rates will be at least 25 basis points (0.25 percentage point) higher.


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The odds associated with fed fund futures contracts -- widely accepted as the best predictor of what the FOMC will do with the benchmark Fed Funds Target Rate -- are constantly changing, so stay tuned for the latest odds.

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