Fed Traders Have Dialed Back Bets on a Supersized March Hike
- Market had at one point indicated a half-point was more likely
- Prospects for super-sized increase have slipped amid tensions
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Swaps traders are now indicating that a quarter-point hike from the Federal Reserve at its March meeting is more likely than an unusual supersized increase of 50 basis points.
While hotter-than-anticipated U.S. inflation and apparent hawkishness by the central bank had helped spur speculation earlier this month that the larger-sized increase was more likely than not, the recent bout of geopolitically-fueled market risk aversion has brought pricing down and a quarter-point move looks to be the most likely scenario. The lack of any major indication for a larger hike in the recently released minutes of the last Fed meeting have also helped solidify the case for a more standard-sized move.