Back in October of last year, 55% of traders in Fed Funds futures contracts assumed the U.S. Federal Reserve would deliver an interest rate cut this month, bringing the base rate down to the 3.25% level. Today, 90% of them think the Fed will hold rates at 3.5% when it meets in 19 days time.
In other words, another cut from the Fed is off the table, as far as Wall Street is concerned.
Two factors appear to have helped change traders’ minds about the Fed’s plans. And by weird coincidence we’ll get new, market-moving data on both fronts today:
- The Bureau of Labor Statistics will report a new set of nonfarm payroll jobs numbers today. The consensus of analyst estimates is for a gain of 70,000 jobs and unemployment to decline marginally to 4.5%. The new numbers are due at 8.30 a.m. Eastern time.
- The U.S. Supreme Court is expected to rule on whether President Trump’s trade tariff regime is legal. The expectation is that the court will say the White House does not have the right to impose new taxes without Congress’s approval. That would imply that the government might be required to refund companies something like $179 billion in extra tariffs, collected since April last year. The ruling is due after 10 a.m. Eastern.
