Chances of 5%-plus fed funds rate by May jump to 73% after surprisingly strong jobs report for January

Traders see a 73% likelihood that the fed funds rate will rise to between 5% and 5.25% by May following January’s unexpectedly strong nonfarm payrolls report, up from a 60% chance on Friday. The revised expectations on Monday came as T-bill rates marched higher. The 1-year bill rate
TMUBMUSD01Y,
4.908%
rose 8 basis points to 4.9% as of Monday morning. The fed funds rate currently sits between 4.5% and 4.75%, and traders are factoring in a 97% chance of another 25-basis-point hike in March.