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The Market at a Glance
Stock indexes rise as investors fully price in a 25-basis-point Federal Reserve rate cut in September amid benign inflation and labor market weakness, with futures showing 100% probability.
- Investors and traders have significantly increased their expectations for the Federal Reserve to implement a rate cut exceeding 25 basis points at the upcoming September 16-17 meeting in the U.S.
- This expectation follows recent economic data showing largely expected July consumer prices and surprising weakness in the U.S. labor market, although some experts say September’s cut is not guaranteed yet.
- Traders added about $2 million in premium to positions in SOFR September contracts designed to profit if rates are cut by 50 basis points, while Treasury yields fell notably on these bets.
- Treasury Secretary Scott Bessent said policymakers could start a series of rate cuts with a 50 basis-point reduction in September, and BlackRock’s Rick Rieder noted inflation was stronger than recent months but below feared levels.
- The growing consensus for rate cuts has pushed stocks to record highs and lowered Treasury yields, signaling market optimism about looser Fed policy despite some data uncertainties.
11 Articles
11 Articles
The market at a glance
Stocks rally on hopes for Fed rate cut
Stocks and Bonds Climb on September Fed-Cut Wagers: Markets Wrap
(Bloomberg) -- Wall Street traders kept piling into bets that the Federal Reserve will soon be able to cut interest rates, with stocks hitting all-time highs and Treasury yields falling alongside the dollar.
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A largely benign US inflation report is bolstering the case for traders betting that the Federal Reserve will soon cut interest rates, with some seeing an increased possibility of an outsized reduction. Bets that the Fed will reduce rates by more than 25 basis points in September also gained traction on Tuesday, with traders adding some $2 million in premium to a position in the Secured Overnight Financing Rate (SOFR) that would benefit from su
Weaker dollar boosts gold as markets price in rate cuts
A weaker dollar is driving gold higher after inflation data almost nailed on a rate cut by the Federal Reserve in September. Interest rate traders are now pricing a full 25 bps cut in September, while some politicians are calling for a 50 bps cut. “In short, the dovish repricing of Fed policy expectations continued, […] The post Weaker dollar boosts gold as markets price in rate cuts appeared first on UK Investor Magazine.
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