Federal Reserve rate-cut odds have picked up over the past month, thanks to cooling inflation and slowing economic growth, including Friday's jobs report. Markets are growing more confident in a September Fed rate cut and at least two by year-end.
Fed chief Jerome Powell testifies before Congress on Tuesday and Wednesday. He's likely to reiterate that disinflation has resumed but more is needed before policymakers take action.
On Thursday, the June consumer price index is due, followed by the producer price index on Friday. Those reports also will give a strong indication about the June reading for the Fed's favorite inflation gauge, the core PCE price index.
Market Risks Rise, Palantir Breaks Out; Powell Looms
Fed Rate Cut Odds
July 31: There's just a 6.7% change of a quarter-point Fed rate cut by the July 30-31 meeting, down from 8.2% on June 10 and 83.7% on March 27.
Sept. 18: Investors see a 73.9% chance of a quarter-point rate cut by the Sept. 17-18 Fed meeting, with a slim 4.8% chance of 50 basis points. On June 10, it was a virtual toss-up, with a 50.5% chance of a quarter-point move. On March 27, investors had 25 basis points at 95.8%, with a 71% chance of 50 basis points and 27% for 75 basis points.
Nov. 7: The odds of a quarter-point move rise to 84.3% by the Nov. 6-7 Federal Reserve meeting, which ends two days after U.S. elections. There's a 32.3% chance of 50 basis points.
On June 10, there was a 64.4% chance of a quarter-point move and 17% for 50 basis points. On March 27, the odds were a 97.9% chance for 25 basis points, 83.4% for 50 basis points, 48.9% for 75 basis points and 14.5% for 100 basis points.
Dec. 18: By the final Federal Reserve meeting of the year on Dec. 17-18, market see a 96.2% chance of at least one quarter-point cut. There's a 71.7% chance of at least two cuts this year, with a 25% hope for 75 basis points.
Back on June 10, investors saw an 86.3% chance of a Fed rate cut, but a 13.7% of no cut at all in 2024. Markets then forecast a 46.2% chance of two rate cuts this year, and only 10.9% for 75 basis points.
On March 27, markets expected a 99.4% chance of a quarter-point Fed rate cut by year-end, 93.7% of 50 basis points, 73.5% of 75 basis points and 39.1% of 100 basis points.
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