This white paper provides a review of how markets behave before and after Fed rate decisions and explores the impact of Fed rate decisions to market pricing, and concludes the following key points:
- Market volatility can impact expectations of the FOMC’s rate decisions, and volatility has kept downward pressure on rate increase probabilities ahead of the December 19 FOMC.
- The market’s response to FOMC decisions may differ depending on the expectations ahead of the meeting.
- Participants often turn to the 10-year T-Note to manage the risk of interest rate movements.
- Liquidity in the 10-year T-Note remained high even when the market was less-than-certain about the FOMC outcome.
Dive into how macroeconomic events affect CME Group futures liquidity, in bid-ask spread, book depth and cost to trade terms.