More bets on America’s rate hikes in the money market

I.After Joe Biden’s election victory, investors in the money markets are increasingly relying on an increase in US key interest rates over the next few years. From the euro-dollar futures contracts, which will mature in September 2023, the expectation could be read on Monday that the US Federal Reserve (Fed) would raise its interest rates more than once by then.

The calculation is based on interest rate steps totaling 0.40 percentage points. At the beginning of last week it was only 0.30 percentage points. In the United States, the key interest rate for supplying commercial banks with money is currently in a range of zero to 0.25 percent.

Speculation on help

“The stock exchanges are now firmly assuming interest rate hikes by the second half of 2023,” said market strategist Kenneth Broux from the Société Générale bank in London. But that is still a long way off. In addition, the expected timing could change, especially if the American economy continues to lose jobs, as it did at the end of the year.

The financial markets are already speculating on additional government stimulus after the Democrats’ victory in the American Senate elections. Because this helps the President-elect Joe Biden to a majority in both Congress Chambers.


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