The Best Investment Manager's Guide: U.S. Federal Reserve Likely to Cut Rates by 50 bps in September - CME Group Data Reveals
According to the latest data from the CME Group, there has been a significant increase in the likelihood of a larger 50 basis point (bps) rate cut from the U.S. Federal Reserve in September. The probability of a rate cut from the current 5.25 - 5.50% rate to 4.75 - 5.00% now stands at 48%, up from 42% the previous day and 36% last week.
This surge in the probability of a larger rate cut comes after weaker job openings data from the Bureau of Labor Statistics and ahead of the Nonfarm payroll report expected on Friday. Job openings in July were reported lower than expected, and economists are looking for 164,000 job additions in August.
On the other hand, the likelihood of a 25 bps decrease in rates has fallen, with the current probability standing at 52%, down from 58% the previous day and 64% last week.
Traders are now increasingly betting on a larger rate cut at the upcoming Federal Reserve meeting on September 18, 2024. Fed Chairman Jerome Powell's recent comments at Jackson Hole have also boosted confidence in a rate cut next month.
Overall, traders are anticipating a 100% chance of a September rate cut, with the possibilities of either a 25bps or 50bps cut now evenly balanced.
In conclusion, the data suggests that the Federal Reserve is likely to implement a significant rate cut in September, which could have implications for the financial markets and individual investors. It is important for everyone to stay informed about these developments and consider how they may impact their own finances and investment strategies.