The third full week of February 2018 marked the quietest week for the S&P 500 (Index: INX) over the past month, although the market closed on Friday, 23 February 2018 with an unexpectedly strong rally.

That strong response on Friday appears to have been largely motivated by the news that the Federal Reserve would be less aggressive than had been speculated in its plans to hike short-term interest rates in the U.S. during 2018. The following table shows what investors expect for the future for the Federal Funds Rate in 2018, where quarter-point rate hikes are expected to be announced at the Fed’s Open Market Committee meetings scheduled for the end of March (2018-Q1), June (2018-Q2) and December (2018-Q4).

Probabilities for Target Federal Funds Rate at Selected Upcoming Fed Meeting Dates (CME FedWatch on 23 February 2018) FOMC Meeting Date Current             125-150 bps 150-175 bps 175-200 bps 200-225 bps 225-250 bps 250-275 bps 275-300 bps 12-Mar-2018 (2018-Q1) 16.9% 83.1% 0.0% 0.0% 0.0% 0.0% 0.0% 13-Jun-2018 (2018-Q2) 3.9% 31.0% 60.0% 5.2% 0.0% 0.0% 0.0% 26-Sep-2018 (2018-Q3) 1.5% 14.0% 39.9% 36.3% 7.9% 0.4% 0.0% 19-Dec-2018 (2018-Q4) 0.8% 8.0% 26.9% 36.4% 21.5% 5.7% 0.7%

In the table above, we’re trying something new to help better visualize what the probabilities indicated by the CME Group’s FedWatch tool for the likely timing of changes in U.S. interest rates are communicating. Here, the cells that have been highlighted in yellow in each row represent when the odds that the Fed will hike the Federal Funds Rate at the selected date are greater than 50%, where the cell whose probability is shown in boldface font indicates the minimum target range to which they will likely be set. [If you’re reading this article on a site that republishes our RSS news feed, you may need to click through to our site to see the color-coded formatting.]