Inflation Report Is Out, Traders Factor In Three 25 Bps Rate Cuts By December

CME Group’s FedWatch data shows 25-basis-point rate-cut odds rising to 92.2% in September, 62.4% in October, and 51% in December.

Investor sentiment brightened after Tuesday’s inflation data, sending U.S. stocks higher at the open and fueling bets on three Fed rate cuts this year. 

The CME FedWatch tool shows traders are considering a 92.2% probability of a 25 basis point rate cut in September and a 62.4% probability of another quarter-point reduction in October. In December, too, traders expect the central bank to cut rates by another 25 bps, with the probability at 51%. This is higher than Monday’s readings of 85.9%, 55.1%, and 45%, respectively.

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