Traders bet Fed will cut rates this month
Traders are pricing in a 92.5% chance of a quarter-point rate cut at the Fed’s October meeting and a 50% chance of another cut in December. Chances of a rate cut by the Federal Reserve later this month rose after disappointing services reading fueled fears that the economic slowdown would tip the U.S. into a recession. The tool is based on futures pricing from live markets and reflects the views of traders placing real bets on the CME exchange. The surge in futures prices lifted the implied probability of a 25 basis point rate cut from the Fed at its two-day meeting on Oct. 29 and 30. It showed the likelihood of a cut had risen to 92.5% from 77% on Wednesday. The services sector grew at a considerably slower pace than expected in September with the ISM Non-Manufacturing Index posting its the weakest reading since August 2016. The stock market sold off sharply on the data. The Fed, after raising rates nine times from 2015 through last December, has