Markets push out rate hike expectations to October

Fed fund futures prices surged on Wednesday morning, suggesting financial markets expect the U.S. Federal Reserve to hold off on raising interest rates until late 2015 at the earliest, as December retail sales data came in lower than expected and a dramatic drop in copper prices was seen as reflecting a weakening outlook for the global economy.

The earliest contract to price in more than a 50 percent probability of the Fed making its first interest rate increase since 2006 is now October, according to CME FedWatch. Previously, September had been priced in as the most likely launch point.

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Cramer: Step back, low rates hurting banks

Economists polled by Reuters last week following stronger-than-expected U.S. payrolls gains for December had seen June as the month when the Fed will raise rates.

Futures contracts were rallying across the board. The September contract was at the highest since late October and the July contract at the highest since Dec. 1.

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