NEW YORK (MarketWatch) -- Interest-rate futures indicated traders raised bets that the Federal Reserve will increase its target rate by mid-2010 on Friday after the Labor Department said the economy shed far fewer jobs than predicted last month and the unemployment rate unexpectedly declined. The August 2010 fed funds contract indicated traders expect rates to rise to 0.50% by then, compared to a 0.34% rate a week ago and from the current range of zero to 0.25%. Futures for December 2010 show traders expect the benchmark rate to be 0.94% by then, compared to 0.81% on Thursday. The Fed typically changes rates in 0.25-point increments, but futures contracts settle at the average rate fed funds traded at for the month.
