Fed funds futures tell the story

A fundamental question addressing the Fed's exit strategy from their current policy was posed by Michael Englund of Business Week:

"The presumed fear in the market, of course, is that the Fed is poised for the usual policy mistake of taking back accommodation by too little, too late. And that raises the question: Will the Fed soon articulate the parameters for its exit from the U.S. version of ZIRP (zero interest rate policy) in an effort to restrain yields from shooting even higher, boost the dollar, and cap commodity price increases? "

The market's answer? One can see it in the Fed Funds futures curve, which has been steepening considerably. The market expects the Fed to start hiking rates as early as Dec-09 - Jan-10.