Markets See 80% Chance of December Fed Cut After Inflation Data
- Treasury two-year yield falls as much as 10 basis points
- Measure of underlying US inflation remained firm in October
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Traders added to wagers that the Federal Reserve will cut interest rates by another quarter point next month after in-line inflation data, spurring gains for Treasury debt.
The rally trimmed yields on two-year notes, more closely tied than longer tenors to Fed rate decisions, by as much as 10 basis points to 4.24%. Swaps traders boosted to about 80% the probability that the Fed will cut rates again on Dec. 18, up from around 56% earlier Wednesday. Through June, they priced in just over 60 basis points of cumulative reductions.