Fed Funds Futures
a.k.a. Fed fund futures
Futures contracts based on the average federal funds rate in a month, used to read what markets expect…
In plain English
Futures contracts based on the average federal funds rate in a month, used to read what markets expect the Fed to do.
Fed funds futures trade on CME and settle on the average federal funds rate over a given month. Their prices can be turned into market-implied odds of a rate cut or hike at each Fed meeting.
Tools like the CME FedWatch tool do that maths. When you hear 'markets price an 80% chance of a cut', it usually comes from here.
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