Countdown To Higher U.S. Interest Rates

1) Fed expectations for the Fed Funds rate through December 2017

Average Fed expectations for the Fed Funds rate (1:59)

Lowest of Fed expectations for the Fed funds rate & the first hike since June 2006  16 December 2015 (1:46)

2) CME probability for a US rate hike and when

3) What the Fed Funds rate is, it’s history and how this rate is set

Trading the Fed Funds rate higher requires establishing a short position in the underlying futures contract. As the rate rises the contract price falls to reflect the increase in rate.

To convert the contract price into the rate it represents
Take 100.00 – the contract price = the rate
Example 100.00 – a contract price of 99.46 = a rate of 0.54%
Each 0.01 change in price = $41.67
Contract value at 0.54% = $2,250

4) One easy trade to follow

Trade
Short the CME December 2016 Fed Funds futures contract (ZQZ16)

Price = 99.46
Contract value = $2,250
Rate = 0.54%

Objective
The Fed’s target by 31 December 2016
Objective price = 98.20
Rate = 1.80%
Contract value = $7,500

5) We have 10 Federal Open Market Committee meetings between now and 31 December 2016.

6) Click here to enlarge the Dec. 2016 delivery rate, price, contract valuation chart below
7) Current chart and quotes

8) To experiment with any potential outcome for this trade.

9) Click here and open the interactive risk reward spreadsheet

10) Contact me if you’d like to review any of the spreadsheets enabling you to experiment with any potential outcome for any trade or your own risk/reward criteria.

11) FOMC meeting schedule for setting the Fed Funds rate

12) Inflation Target Of 2% To Become The New Barometer For Further Rate Hikes

Additional trades/spreadsheets

13)  3 Month Rates March, June December Fed Funds March hedge
14)   Fed Funds December 2016 2

15)   Fed Funds March 2016 S 99.74 (no hedge)
16)   Fed Funds December 2016 S 99.46 (no hedge) 100K
17)   Fed Funds December 2016 S 99.46 (no hedge) 10K
18)   Trading 3 month rates higher through December 2016
19)   3 Month Dec 2017 S 99.70 (no hedge)
20)  3 Month put weighted vol spread Dec 2017
21)  3 Month vol spread Dec 2017
22)  3 Month vol bear spread no hedge Dec 2017
23)  3 Month GEH-M-Z-201616 Fed Funds ZQ-H16 10.05.2015

Fed Funds 1954-2015 cash market and historical price data

25) Click here to enlarge the rate, price contract valuation chart below.

26) Click here for a current chart and the 1954-2015 historical price data

27) The last Fed tightening cycle 2004-2006 from 1.00% to 5.25%

28) Why the Fed hasn’t raised rates (3:04)

Source CME Group

29) Account types

  • Fully managed, we work on a 0.00% management fee and 12.50% of net new high profit.
  • Managed according to your defined criteria and instruments traded.
  • Broker assisted, you decide the trade and we place all the orders to ensure it’s done correctly.
  • Self directed you decide and place all trades/orders online using any platform of your choice.

30) DFX opening instructions (account minimum $10,000)
31) Opening instructions for Introducing Brokers/Agents 
32) Clearing and Exchange Members for $500,000+ accounts
33) The world’s largest dollar volume exchange group
34) CME videos

35) How funds are protected
36) Commodity Futures Trading Commission

Contact me with any questions

Regards,
Peter Knight

37)  Contact details

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RISK DISCLOSURE STATEMENT

PROGRAM AVAILABILITY IS DEPENDENT ON YOUR COUNTRY OF RESIDENCY AND FINANCIAL STATUS

PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. EXAMPLES OF HISTORIC PRICE MOVES OR EXTREME MARKET CONDITIONS ARE NOT MEANT TO IMPLY THAT SUCH MOVES OR CONDITIONS ARE COMMON OCCURRENCES OR ARE LIKELY TO OCCUR.

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT.

IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADE PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF THE HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS.

BID/ASK SPREADS, BROKERAGE COMMISSION, CLEARING, EXCHANGE AND REGULATORY FEES WILL HAVE AN ADVERSE IMPACT ON THE NET OVERALL PERFORMANCE OF YOUR ACCOUNT. PRIOR TO MAKING A DECISION TO PARTICIPATE IN ANY INVESTMENT MAKE SURE YOU FULLY UNDERSTAND THE FEES ASSOCIATED WITH TRADING.

THE INFORMATION PROVIDED IN THIS REPORT CONTAINS RESEARCH, MARKET COMMENTARY AND TRADE RECOMMENDATIONS. YOU MAY BE SOLICITED FOR AN ACCOUNT BY ONE OF OUR REPRESENTATIVES OR EMPLOYEES. IT SHOULD BE KNOWN THAT THE REPRESENTATIVES OF OUR FIRM MAY TRADE FUTURES AND OPTIONS FOR THEIR OWN ACCOUNTS OR THOSE OF OTHERS. DUE TO VARIOUS FACTORS (SUCH AS MARGIN REQUIREMENTS, RISK FACTORS, TRADING OBJECTIVES, TRADING INSTRUCTIONS, TRADING STRATEGIES, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE LIQUIDATION OR INITIATION OF FUTURES OR OPTIONS POSITIONS THAT DIFFER FROM THE OPINIONS AND RECOMMENDATIONS FOUND IN THIS REPORT.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.

YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES.

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Asset Investment Management

Family Office, Advisors

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