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Money markets traders stick with views on fed rate hikes

NEW YORK Aug 31 Traders clung to their views on Monday on the timing of an interest rate increase by the Federal Reserve after Fed Vice Chairman Stanley Fischer's remarks on inflation at a central bankers conference in Jackson Hole, Wyoming on Saturday. U.S. interest rates futures suggested traders see a 28 percent chance the Fed would raise rates at its September 16-17 meeting, unchanged from Friday, according to CME Group's FedWatch program. The Dec federal funds contract implied a 56 percent likelihood of a rate rise, matching late Friday's level.

In a highly anticipated speech, the No. 2 Fed official said domestic inflation will likely rebound as pressure from a strong dollar fades, allowing the U.S. central bank to lift rates gradually. He also cautioned not to overreact to a possible Chinese slowdown following a tumultuous week in global stock markets.

The over-the-counter market signaled traders priced in stronger probabilities of a rate increase by year-end than futures.

In early Monday trading, overnight indexed swap rates implied traders see a 37 percent chance the Fed would raise rates in September and a 78 percent chance for a December rate increase.

Money markets us rates futures slip after fed officials remarks

(Add details on market action)NEW YORK Nov 18 U.S. interest rates futures were steady to lower on Wednesday as remarks from several top Federal Reserve officials reinforced the notion the U.S. central bank would raise interest rates at its next policy meeting in December. Rates futures implied traders see a 72 percent chance of a rate liftoff in December, compared with 64 percent on Tuesday, according to CME Group's FedWatch program."I am now reasonably satisfied the situation has settled down ... So I am comfortable with moving off zero soon, conditioned on no marked deterioration in economic conditions," Atlanta Fed President Dennis Lockhart told a conference of bankers, traders and regulators in New York. The pace of rate hikes will likely be "relatively gradual or shallow," Lockhart said.

Rates futures suggested traders see a 60 percent likelihood the Fed would increase rates again at its June 2016 meeting, compared with 54 percent on Tuesday. Cleveland Fed chief Loretta Mester said the U.S. economy could handle a modest rate hike, while New York Fed President William Dudley said he doesn't expect a "huge surprise" or a big market reaction when the Fed begins raising rates. Mester and Dudley spoke at the same event as Lockhart.

Bets on a rate hike in December have increased the borrowing cost for dollars. The London interbank offered rate for three-month dollars rose for an eighth straight session to 0.36960 percent, up 0.25 basis point from Tuesday and the highest since September 2012.

Libor is a benchmark rate for $350 trillion worth of products worldwide. In the currency market, the interest rate spread on a three-month swap contract to exchange euro-denominated payments for dollar-pegged payments grew for a third day to its widest since July 2012. Banks and hedge funds use these products for currency bets, while U.S. companies use them to hedge non-dollar-denominated bonds. The cost premium, measured by the three-month dollar Libor over the three-month rate on euros , was quoted about minus 50 basis points versus minus 47 basis points on Tuesday, according to ICAP.

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