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Double Rate Cut in Doubt But Market Optimistic on Fed Move in September [1]

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Date: 2024-08

Consumer price inflation cooled in July, but maybe not enough for traders counting on a double rate cut in September.

Traders are pricing in a 41.5% chance that the Federal Open Market Committee lowers its target for the federal-funds rate by 50 basis points in September, according to the CME FedWatch tool.

That’s down from 53% on Tuesday and 69% a week ago. Now odds of a single 25 basis point cut are at 58.5%.

Through the end of the year, odds of 75 basis points in cuts were up to 24.9% from 18.1% on Tuesday, while 100 basis points in cuts were at 44.2% from 42.5%. Odds of 125 basis points in cuts were up at 25.9% from 31.7%, while traders see just a 5% chance of 150 basis points in cuts this year.

The CPI rose at a 2.9% annual rate in July, compared with expectations for 3%.

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[1] Url: https://www.barrons.com/livecoverage/stock-market-today-081424/card/double-rate-cut-in-doubt-but-market-optimistic-on-fed-move-in-september-6DdkVnxYfgXPCAb0XcZ3

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