Traders Start to Bet on Supersized Fed Rate Cut in September
- October fed funds futures began flying off shelves Thursday
- Price implies a half-point move is likely to be considered
The Marriner S. Eccles Federal Reserve building in Washington, DC.
Photographer: Ting Shen/BloombergThis article is for subscribers only.
Bond traders are ramping up bets that the Federal Reserve will cut interest rates by half a percentage point in September instead of the standard quarter-point increment.
That’s evident in the federal funds futures market, where softer-than-anticipated inflation data released Thursday morning unleashed a wave of buying of October contracts, which continued on Friday. Expiring Oct. 31, the contracts already fully price in a quarter-point rate cut at policymakers’ Sept. 18 meeting.