Do Not Use Fed Funds Futures to Anticipate the Fed
by Tom Lee of Parametic
The Fed funds futures market usually gets the next move by the Fed correct. Actually, it is ‘usually does not’, per this research by Parametric.
But, the Fed funds futures market does give the business press something to write about. Full employment for the business press – right or wrong. Useful for your portfolio? Wrong.
"Markets, particularly liquid markets, contain a lot of information, and for that reason most economists agree that we should pay attention to what they can tell us about the broader economy, at least in the short term. But are markets good at predicting everything? When it comes to the Federal Reserve’s decisions about interest rates, the answer seems to be no."