CME Group FedWatch essentially confirms June rate hike

CME Group FedWatch tool, which calculates unconditional probabilities of Federal Open Market Committee (FOMC) meeting outcomes to generate a binary probability tree, shows the probability of a rate hike on June 14 at 95.8%, essentially confirming it. 

The probability of a rate hike was at 67.6% a month ago. As the macro data from the U.S. continued to show improvements throughout the month, the odds gradually increased. Today's strong ADP private sector employment report and hawkish comments from Fed's Powell were the last two factors that ramped up the expectations of a 25 bps hike. 

• Fed’s Powell: Inflation still on track for 2% target
• US: Economic activity in the manufacturing sector expanded in May - ISM
• US: Manufacturing PMI slips to eight-month low in May - Markit
• US: Private-sector employment increased by 253,000 from April to May - ADP