Maybe you want to blame a drastically slowing Europe and China. Maybe you want to blame ISIL or ISIS. Maybe you want to blame slowing economic data in the United States, or maybe you want to just blame a stock market that got overvalued and was in dire need of a correction. Maybe you want to blame falling oil and deflation. Whatever your poison is for the blame, the timeline for a Federal Reserve interest rate hike cycle has been getting pushed out further and further.

It was just at the end of September that the Fed Funds futures were pricing in an interest rate hike probability of 100% — up to 0.25%, that is. There was a brief time as recently as September, and also in June and July, that the Fed Funds rate was priced in going to 0.25% by May of 2015. That was then.

On Tuesday, the Fed Funds futures indicated that a rate hike’s 100% chances were being pushed out for a 0.25% Fed Funds rate until September of 2015. Wednesday’s severe stock market drop took the 10-year Treasury yields back under 2% for part of the day. This is a trade bracing for another threat of recession, but without severe weather to blame. And those Fed Fund futures on Wednesday now only signal a 100% chance of a rate hike (again only to 0.25%) happening in October 2015.

Fed Fund futures are not signaling a 1.00% Fed Funds rate now until October of 2016. There was a point in July that the Fed Funds futures were pricing in a 1.00% Fed Funds rate by February of 2016.

As a reminder, Fed Fund futures are not perfect. They fluctuate with market trends. They have also not been correct in prior years. That being said, there is real money that influences these prices.

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Each contract is noted as having a face value of $5,000,000 for one month, calculated on a 30-day basis at a rate equal to the average overnight Fed Funds rate for the contract month. Again, these contracts do change, so what is seen on one day can fluctuate handily based on data.

It is still widely expected that October will mark the last month of the bond buying, and it has been tapered since early in 2014.

Daily Fed Funds futures can be monitored at the CME quote pages.

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