Money Cucumber

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 Dece...

Be ready: the worst is yet to come. Financial markets are flashing a key warning sign of a recession, and the global economy is weakening as the U.S.-China trade war intensifies. All of which is heightening fear about the U.S. economy and about whether the Trump winning streak is nearing an end. On Wednesday, a rare realignment in interest rates intensified those worries. The yield on the benchmark 10-year U.S. Treasury note briefly fell below the yield on the 2-year Treasury for the first time since 2007. Normally, investors earn higher interest on longer-term bonds than on short-term ones. Put another way, the government will usually pay more to investors who are willing to lend their money for longer periods. So when that equation reverses itself — when longer-­term Treasurys pay less than shorter-term ones — economists call it an “inverted yield curve.” An inverted curve suggests that bond investors expect growth to slow so much that the Federal Reserve will soon feel ...