Rate Cut Odds Shrink Dramatically Following FOMC Decision

-edited

The odds the Fed Funds Rate would be 1.75% to 2.00% fell from 54.2% yesterday to 0% today.

CNBC reports Chances of a September Fed Rate Cut Increase

Traders now see a bigger chance of another rate cut by the Federal Reserve in September after it lowered interest rates for the first time since 2008 and hinted at further accommodation.

The fed funds futures market now points to a 76% of at least a quarter point rate cut at the Fed’s September meeting, according to CME FedWatch tool. Prior to Fed’s decision at 2 p.m. ET, traders were pricing in about a 65% chance of a rate reduction in September.

September Rate Cut Odds

Yes, the odds of a single rate cut rose from 32.6% to 77.3% but the odds of a 50 basis point cut in September fell from 54.2% to 0%. And the odds of no cut rose from 0% to 22.7%.

December CME Odds

Looking ahead to December the odds of a target rate of 1.00-1.25% fell to 0% as did odds of 1.25-1.50%.

The odds there would be no further cuts rose from 0% to 8.4%.

Everything in between shifted in the direction of tighter, not looser Fed policy.

CNBC really messed up this story.

Mike "Mish" Shedlock

Comments (15)
No. 1-11
Tony Bennett
Tony Bennett

"The odds the Fed Funds Rate would be 1.75% to 2.00% fell from 54.2% yesterday to 0% today."

...

heh, nothing a bit of market tantrum won't fix ...

lol
lol

LOL ......sureeee!Everyone knows he's talking smack.Once JP gets bitch slapped by the "market" ,look for rates below zero (NIRP)before Christmas along with massive tsunami wave of fresh money printing!He out of options,treasury borrowing (printing)$ 600 billion a quarter "officially",and we all know it's way way way more than that!

Greggg
Greggg

Casual_Observer
Casual_Observer

Wait until the next economic numbers come out and we actually see job losses. It has started in earnest in big tech at Oracle and Intel. I say 50/50 shot we get another cut this year. There will be some disasters come 2020 which lead to more cuts.

truthseeker
truthseeker

Since they only cut a quarter and ended their liquidity drain 2months early interest rates mostly fell so gold selling off so hard for is a mystery to me-good buy here imo-should I submit this?