The Best Investment Manager's Guide to the Likelihood of a Larger Rate Cut from the Federal Reserve in September
The latest data from the CME Group shows a significant increase in the probability of a 50 basis point rate cut from the U.S. Federal Reserve in September. The likelihood of a decrease in the target rate to 4.75 - 5.00% now stands at 48%, up from 36% just last week.
This jump in probability follows weaker job openings data and precedes the Nonfarm payroll report due on Friday. Job openings in July were lower than expected, and economists are forecasting 164,000 job additions in August.
On the other hand, the probability of a 25 basis point decrease has decreased to 52%. Traders are now favoring a larger rate cut at the upcoming Federal Reserve meeting on September 18, 2024.
Overall, traders are confident in a September rate cut, with the chances of a 25bps or 50bps cut being nearly equal. Federal Reserve Chairman Jerome Powell's recent comments have solidified expectations for a rate cut next month.
In conclusion, investors should be prepared for potential market volatility leading up to and following the Federal Reserve meeting in September. Keep a close eye on economic indicators and be ready to adjust your investment strategy accordingly.
