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Traders Boost Bets on Super-Sized March Fed Hike on Jobs Blowout

  • Swaps price in roughly even odds of a 50-basis-point liftoff
  • Would mark Fed’s biggest interest-rate increase since 2000
Updated on

Traders increased bets that the Federal Reserve will kick off its interest-rate hikes with the steepest increase in two decades after an unexpectedly strong jobs report reinforced speculation the economy is at risk of overheating.

The pricing of overnight index swaps tied to Fed meeting dates indicates a fed funds rate of around 0.44% after the March gathering, about 36 basis points above the current effective rate. That essentially means traders are giving roughly even odds to the chance that the Fed will start tightening monetary policy with the first half-percentage-point increase since 2000, instead of a typical quarter-point move.