Fed funds futures traders are pricing in a diminishing likelihood of a post-July rate hike by the Federal Reserve after a pair of reports over the past two days pointed to easing U.S. inflation. After Thursday’s release of the June producer price index, traders saw just an 11.4% chance of a rate hike in September and 18.4% chance of one in November, according to the CME FedWatch Tool; that’s down from 13.2% and 26.7%, respectively, a day ago when the June consumer price index was released. Traders now see the most likely scenario being that the central bank keeps rates between 5.25-5.5% this year, after hiking by a quarter of a percentage point on July 26. In addition, they are factoring in a 23.7% chance of a rate cut by December.
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