Is the market prepared for a couple of interest rates hikes?

As you know, The FED is planning to raise interest rates several times in the near-medium term and they will start to slowly shrink its big portfolio of bonds and assets this year. It’s difficult to know what is going to happen once they start the tapering. Even with the adverse effects of the hurricanes, anyone can´t have doubts about the US economic outlook. The GDP growth will be around 2.4% this year with almost full employment. My biggest concern is the US debt. I think the tax proposal can boost the US economy. 
Economics is a difficult science, it´s difficult to predict the individuals' behaviour but let´s check how the markets are pricing all of these facts.

   GEZ17 futures

This contract is testing a support. I think this contract will be between the 98.5350 and 98.480. 

    GEM18 futures 

The Jun contract has more volatility than the December contract. I broke the support in 98.320 and now it's testing the low of May. This maturity is one of the most interesting because if we have 2 interest rates hikes (December and maybe March), it will look for levels around 98.15 or even lows of the year.

    GEZ18 futures

December 18 is more directional that Dec17 and Jun18. If the economy performs as we have commented, this contract should look for lows. It´s a long time and it´s more difficult to predict. I'm sure that we will see lower prices in the near term.

I’ve chosen these futures because they provide an idea of what the market expects from the FED and the US economy. Having in mind that the last interest rate hike was in June and after the hawkish September meeting is better to be short in this kind of markets as well as the fed funds futures. 

Trade Idea

     GEZ18 futures

Maybe it’s late to short the GEZ18, but I think that it can go down to test the support around 98.085 in the coming days. I would protect this trade with a stop around 98,180. I like that the volume has been increasing since the beginning of September. Another strategy would be a long spread GEZ17-GEZ18, betting that the differential between this two contracts will increase. This strategy offers less volatility but higher costs and it's difficult to execute this trade without the right tools.

Disclaimer

I wrote this article myself, and it expresses my own opinions that shouldn't be used as a trading advice. Trading carries considerable risk due to the high leverages involved