FED WATCH

CME Group Fed Watch – December 7, 2007
In advance of next week's Federal Open Market Committee meeting on December 11, the CME Group will be reporting daily rate change probabilities in the FOMC's federal funds target rate, as indicated by the 30-Day Federal Funds futures contract. The 30-Day Federal Funds futures contract is a key benchmark interest rate barometer that reflects the forward overnight effective rate for excess reserves that are traded among commercial banks in the U.S. federal funds market.

Based upon the December 7 market close, the 30-Day Federal Funds futures contract for the December 2007 expiration is currently pricing in a 100 percent probability that the FOMC will decrease the target rate by at least 25 basis points from 4-1/2 percent to 4-1/4 percent at the FOMC meeting on December 11.

In addition, the 30-Day Federal Funds futures contract is pricing in a 41 percent probability of a further 25-basis point decreasein the target rate to 4 percent (versus a 59 percent probability of just a 25-basis point rate decrease).