No change after GDP data

Implied probabilities have ticked higher in the past few days.

Today the FT looks closer Fed funds futures and explains some of the quirks that skew the numbers. These are things I've written about extensively but are well-covered by the FT.

For instance, understanding that the Fed is targeting a range and probably won't hit the midpoint is crucial.

"For example, if the effective Fed funds rate ends up closer to the lower end of the central bank's range then the likelihood of a rate rise implied by Fed funds futures contracts is, in fact, much higher. If the effective Fed funds rate goes to 37.5bp, then the probability is about 70 per cent," the FT writes.

My thinking is that rates will be pushed artificially lower by year-end liquidity issues. The lower effective rate means the true implied probability of the Fed raising rates by 25 bps is higher than 74%.