U.S. Stock Rout Has Fed Interest-Rate Signals Edging Lower
Why the Recent Market Decline Is Different Than Previous Selloffs
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Traders are signaling that the abrupt pullback in high-flying risk assets is likely to weigh on interest-rate policy as Federal Reserve Chair Jerome Powell takes the helm.
That’s the story from Eurodollar futures, where the spread between December 2018 and 2019 contract yields fell by three basis points Monday, the most this year. The move indicates reduced wagers on interest-rate increases next year as the S&P 500 posted its worst rout since 2011 after a painful slide last week. The market-implied odds of an interest-rate increase in the second, third and fourth quarters of 2018 on Monday.