Last week's GDP report for the second quarter and durable goods report for June just reinforced the trend that has been apparent for some time: The market expects 25 basis point increments in the federal funds rate as far as options on federal funds futures can see. The calculations, via the methodology of John Carlson, Ben Craig, and Will Mellick, flawlessly compiled and presented in all of their graphical glory by Erkin Sahinoz:
Here's the data...
Download october_pdfs_080105.xls
... and a PowerPoint presentation with a couple of extra pictures based on the November contract:
Download imp_pdf_slides_for_blog_072905.ppt
... and a simple Excel program illustrating the methodology, courtesy of Will Mellick:
Download ExampleCalculations.xls
UPDATE: John Irons reminds us of the not-so-good news in the GDP report. James Hamilton does the forward looking analysis and concludes, like the market apparently, that
... the economy appears to be chugging along nicely, though the overall effect of the new figures, including the historical revisions, would be to make an objective observer ever so slightly more bearish than he or she might have been before seeing the numbers.
Jim provides lots and lots of links to other blogger-chatter as well.