Bullions: Range-bound The market is
betting on more US interest rate hikes in the months to come with
most analysts forecasting interest rates to touch 5.5-5.75% for the
year 2006. Wall Street's biggest bond trading firms are certain that
the Federal Reserve will raise interest rates this month, and are
expecting another increase in August. The prices of interest rate
futures listed on the Chicago Board of Trade show that investors see
a 67% chance that the Federal Reserve will boost its key-lending
rate to 5.5% in August. The futures show a definite likelihood that
policy makers will raise the rate to 5.25% at their meeting on June
28 and 29. Just two weeks ago, there were almost no expectations for
an increase in August and the prices of the futures suggested only a
minority of the traders forecast higher rates this month. The speed
of the turnaround shows that the investors are convinced Federal
Reserve Chairman Ben S Bernanke will battle rising
prices.
