MW:Fed futures drop rate hike projections on payrolls
By Ben Eisen
NEW YORK (MarketWatch) -- Expectations of the timing of Federal Reserve rate hikes eased slightly Friday after a nonfarm payrolls report came in below expectations. The report showed the U.S. added 169,00 new jobs, below the consensus estimate of 173,000. The unemployment rate, meanwhile, fell to 7.3% from 7.4%. Fed funds futures prices, which trade based on expectations of when the Fed will hike its policy rate, rose after the report. That sent the implied rates lower. The September 2014 contract FFU4 +0.04% had an implied fed funds rate of 0.31%, down 4 basis points on the day, while the December 2014 contract FFZ4 +0.03% had an implied rate of 0.44%, down 5 basis points on the day. Eurodollar contracts, which are more liquid but also approximate the pace of rate hikes, had an implied September 2014 EDU4 +0.07% rate of 0.59%, down 7 basis points on the day, while the December 2014 contract was down 10 basis points at an implied rate of 0.75%.
