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Net Net: Promoting innovation and managing change

Market's message to the Fed: We don't believe you

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Santelli Exchange: 'Long' rates with 'less' tightening

The market still believes the Fed is overstating how many times it will raise rates this year.

Even with the forecasts the U.S. central bank released this week that were even more dovish than before, traders anticipate no more than one hike in 2016, according to fed fund futures activity Thursday.

The Federal Open Market Committee on Wednesday declined to rate its interest rate target, with members also cutting back the future trajectory from the four hikes predicted in December to two. The forecast, included on the so-called dot plot in the Summary of Economic Projections, brought the Fed closer to the market, but not quite all the way in a continuing conflict that some say has contributed to market instability.

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"The 'dot plot' ... is much better anchored to market realities than the March 2015 version," Nick Colas, chief market strategist at Convergex, said in a note to clients. "At the same time, fed funds futures markets are still skeptical that the Fed has it right."

There's a 52 percent chance of a rate hike in July, according to the CME's FedWatch tool. While that's far from a lock, it is the first month ahead with a better-than-even chance. The September meeting, after which Chair Janet Yellen hosts her quarterly news conference, is a stronger bet, with a 60 percent chance.