Fed Funds Futures Now Show Two Quarter-Point Cuts by Year-End
- Market shifted following Trump announcement on Mexico tariffs
- Several U.S. primary dealers now predicting rate cuts in 2019
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Fed funds futures contracts extended their rally and are now indicating more than half a percentage point of interest-rate cuts this year by the U.S. central bank.
While the effective fed funds rate is at 2.39%, the rate implied for the end of 2019 by the January futures contract dropped 15 basis points on Friday to 1.855%. Central bank shifts are often done in increments of 25 basis points, and current pricing implies two cuts of that size by the end of 2019.