09/19/2024 – 7:09
The market is consolidating its bet that the Federal Reserve (Fed) will deliver a cumulative cut of 75 basis points in interest rates by the end of this year, after having opened the easing cycle with a reduction of half a percentage point on Wednesday, the 18th. The pricing appears in the CME Group monitoring and contradicts the positioning of most Fed directors, who expect a reduction of 50 basis points in 2024.
Early this Thursday morning, the 19th, the tool showed a 50% chance of the base rate rising from its current level (between 4.75% and 5.00%) to the range of 4.00% to 4.25%. The day before, this hypothesis was at 42.2%. There was also a slight increase in the possibility of a total reduction of 100 basis points, now at 17.6%. On the other hand, the probability of the Fed opting for an aggregate cut of 50 basis points fell to 32.4%.
Regarding the next meeting in November, the curve increases the still small chance that the US central bank will cut by another 50 basis points (from 29% on Wednesday to 35%). The risk of a smaller adjustment, of 25 basis points, has dropped to 65%.
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