July May Be Back on the Table at the Fed — For a Rate Cut

Forget about Federal Reserve tightening this summer. In the aftermath of the U.K. referendum, the market is implying higher odds of a rate cut than a hike.

The pricing on federal funds futures contracts currently imply a 10 percent probability that the Fed will reduce interest rates in July, with a zero percent chance of a hike. Zip. In fact, implied probabilities signal that all the way through February 2017, looser policy is more likely than a continuation of the central bank's tightening phase.