Fed-funds futures reflect growing chance of half-point March rate hike

Traders responded to Wednesday’s surprisingly strong retail-sales report, by boosting the likelihood of a half-percentage-point rate hike from the Federal Reserve in March. That likelihood is now seen at 12%, up from 9.2% a day ago, as traders pulled back a bit on the chances of a quarter-point rate hike in March, according to the CME FedWatch Tool. A half-point hike in March would take the fed funds rate to between 5% and 5.25%. Retail sales surged by a stronger-than-expected 3% in January, suggesting the economy can keep growing in the first quarter. Treasury yields were mostly higher in morning trading, while major U.S. stock indexes were mostly down.

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