Janet Yellen made a bit of a surprise on Wednesday in her FOMC statement and then again in her press conference. The 6.5% unemployment rate threshold has been lightly removed, in part due to the quality of that 6.5% number. The big number thrown out was in the Q&A session of her forecast speech today, which may have simply been “off the cuff” comments rather than words to be set in stone.

Janet Yellen said that the near-zero Fed Funds rate would remain for a considerable period after the bond buying program ends. She then identified the considerable period as probably around six months.

So, if the tapering of $10 billion ends this fall or so — let’s just say the October FOMC meeting — then that puts the rate hikes coming as soon as April of 2015. The market interpreted this as a more hawkish Janet Yellen but that may not be the case. Again, this is how the market is interpreting her wording based upon Fed Fund Futures.

A look at the CME Fed Fund Futures now has April 2015 as the first date that the Fed Fund Futures are pricing in a 100% chance of rates rising to 0.25% ($99.73). That is 5.5 basis points lower than before the meeting. The prior 100% chance was in the May to June range for 2015.

The Fed Fund Futures now have a 100% chance priced in that August 2015 will be 0.50% in Fed Funds. December of 2015 is the month that Fed Fund Futures are pricing in a 0.75% Fed Funds rate.

As far as when the Fed Fund Futures are pricing in 1% in Fed Funds — that was February 2016 right up until the copy-paste of the Fed Futures image below. So now there is a fight between February and March of 2016. Prior to today, that 1% Fed Funds Rate was not expected to be until May 2016.

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