Last week Tim Duy revealed...
At a minimum, Fed Chairman Ben Bernanke’s speech reinforces my view that a move beyond 5% is not in the mindset of the FOMC at this point. At a maximum, it leads me to shave down my expectations for a move to 5%.
My bets lie with a pause at 5% but I still see Fed funds between 5.25% and 5.75% later this year.
... and Nathan Kaufman added:
Something in the text [of the Beige Book] may signal that the U.S. economy is not overheating, that inflation is less of a threat, or that interest rate hikes may be less likely in the future.
Good call, lads. That, at least, is the impression one gets from the current vintage of Carlson-Craig-Melick estimates of funds rate probabilities, wherein the expectations for another increase in May backed off a tad...
... and the probability that the funds rate will not move any higher than 5 percent made a run for the money:
I've officially retired the picture showing the market's (completely uninteresting) guesses about where the dust will have settled once the FOMC adjourns tomorrow, but it is in the attached PowerPoint and flash files, if you want a gander just for old-time's sake.
Download Imp_pdf_slides_for_blog_032406.swf
Download Imp_pdf_slides_for_blog_032406.ppt
Download implied_pdf_may_032406.xls
Download implied_pdf_june_032406.xls
UPDATE: William Polley has a round-up of press speculation. The Capital Spectator breaks the data down into the indicators saying "go" and those saying "no".