09/05/2024 – 10:35
The financial market increased the chances of a more aggressive easing by the Federal Reserve (Fed, the US central bank) in 2024, after a round of data on the US labor market showed a divergent picture and increased doubts about the employment situation on the eve of the payroll, which is the US labor market report.
At around 10:20 am (Brasília time), the CME Group monitoring tool still showed a majority probability of a 25 basis point (bp) reduction in interest rates by the US Federal Reserve in September, but this option lost its advantage and fell to 55% after the data.
The chance of a larger cut, of 50 bp, rose from 43% before the data to 45% after the publications.
By December, the probabilities of more aggressive monetary easing had gained strength. The market practically equalized the chances of a cumulative reduction of 100 bps – which fell from 40.2% to 37.6% – and of 125 bps – which rose from 34.6% to 37.8%.
Taking third place, the probability of an even bigger easing, to 150 bps, rose to 12.4% from 9.8% after the data. The chance of a more modest easing, to 75 bps, fell to 12.1% from 15.4%.
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