What is the recipe for federal funds rate hikes that continue into summer?  Here are today's ingredients, from MarketWatch...

Treasury prices fell for the fifth time in the past six days Monday after a stronger-than-anticipated inflation warning in an otherwise soft reading on the factory sector...

The Institute for Supply Management said its March sentiment index fell to 55.2% from 56.7% in February, below the 57.3% expected. The reading is still well above the 50% cutoff that indicates a growing factory sector. See Economic Report.
The price paid index rose to a four-month high of 66.5% from 62.5%, ISM said.

...the report shows the industry is in good shape, if not exactly booming, he said.
... and from Reuters:

U.S. construction spending rose 0.8 percent in February, double expectations, as private residential spending surged 1.3 percent to a record high, offsetting a drop in public construction, a government report showed on Monday.

Blend that with last week's news, and here is what you get (as of close of business today):


June_6


That's a pretty good jump in market expectations for three days and, in the overall scheme of things, not a lot of news.  So here's a question: How bad will Friday's employment have to be to keep the lid on that 5.25 probability?       

You may have noticed I haven't bothered to post the estimated probabilities for the May meeting.  No worries -- according to the market, another 25 is, well, baked in the cake.

The data:
Download implied_pdf_for_june_040306.ppt
Download june_implied_pdf_040306.xls

If you are new here and wonder what this post is all about, read this.