Prediction Markets and the fed; good odds for a News Corp - Dow Jones Merger

For our 250th post (since launching on May 1st), we highlight a couple of interesting prediction market contracts currently trading on Intrade.  The first is a contract for the Federal Funds Rate to be at or over 5.25% on December 31, 2007.  If you buy the contract and the Federal Funds Rate is at or over 5.25% on 12/31/07, it expires at 100.  If the rate is below 5.25%, the contract expires at 0.  The historical price chart of the contract is shown below.  It is currently trading at 90.5 and clearly shows that investors are not betting on a rate cut anytime soon.  The contract was trading at 20 at the start of the year, indicating that investors had a much different view at the time.

Another contract we are following is the News Corp/Dow Jones merger to be complete by the end of the year.  While volume for the contract has been low, traders on Intrade think the odds of this one getting done are pretty good.