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...

Factories are slumping, many businesses are paralysed, global growth is sputtering and the world’s two mightiest economies are in the grip of a dangerous trade war. Barely a year after most of the world’s major countries were enjoying an unusual moment of shared prosperity, the global economy may be at risk of returning to the rut it tumbled into after the financial crisis of 2007-2009. Worse, solutions seem far from obvious. Central banks can’t just slash interest rates. Rates are already ultra-low. And even if they did, the central banks would risk robbing themselves of the ammunition they would need later to fight a recession. High government debts make it politically problematic to cut taxes or pour money into new bridges, roads, and other public works projects. “Our tools for fighting recession are no doubt more limited (than) in the past,” said Karen Dynan, an economist at Harvard University’s Kennedy School. The International Monetary Fund (IMF) and the World Bank have dow...