Federal Reserve-watching can be a guessing game, and August and September are a perfect case in point.
Federal funds futures markets priced in little chance of an interest rate increase immediately after the July meeting of the U.S. central bank. They then began to indicate that investors saw it as an increasing possibility before sharply retracing. Much of the uncertainty stemmed from mixed readings on the economy: July jobs numbers were strong yet August's data came in weak, for instance. Some of the gyrations occurred as Fed officials voiced their views on the economic outlook, as you can see in the chart below.
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