Fed 'will raise interest rates by 75 basis points' on Wednesday

STORY: Investors have dramatically raised their bets that the Federal Reserve will raise interest rates by 75 basis points (bps) rather than 50 bps on Wednesday, a swing in expectations which has fueled a violent selloff across world markets.

Expectations for a 75-bps hike at the June meeting jumped to 89% on Tuesday from only 3.9% a week ago, according to CME's Fedwatch Tool. Consequently, expectations of a 50 bps rate hike on Wednesday have melted to 11% from a surefire bet a week earlier.

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