Traders Keep September Fed Hike Hedge After In-Line CPI; October Odds Fall
Traders are still keeping positions to hedge against a possible Federal Reserve rate hike at the September meeting, with markets pricing in roughly a 50% chance of an increase after the latest U.S. inflation data came in moderate. The Consumer Price Index released Wednesday met expectations, helping U.S. Treasuries maintain their gains. The two-year Treasury yield, which is particularly sensitive to changes in Fed policy, fell 3 basis points to 4.18%. The benchmark 10-year yield also declined 3 basis points, to 4.65%. Interest-rate swaps showed that traders cut the probability of an October rate hike to roughly 60% after the economic data, from about 75% the previous day. Markets have fully priced in the Fed's next move in December.
Traders are still keeping positions to hedge against a possible Federal Reserve rate hike at the September meeting, with markets pricing in roughly a 50% chance of an increase after the latest U.S. inflation data came in moderate.
The Consumer Price Index released Wednesday met expectations, helping U.S. Treasuries maintain their gains. The two-year Treasury yield, which is particularly sensitive to changes in Fed policy, fell 3 basis points to 4.18%. The benchmark 10-year yield also declined 3 basis points, to 4.65%.
Interest-rate swaps showed that traders cut the probability of an October rate hike to roughly 60% after the economic data, from about 75% the previous day. Markets have fully priced in the Fed's next move in December.
The Consumer Price Index released Wednesday met expectations, helping U.S. Treasuries maintain their gains. The two-year Treasury yield, which is particularly sensitive to changes in Fed policy, fell 3 basis points to 4.18%. The benchmark 10-year yield also declined 3 basis points, to 4.65%.
Interest-rate swaps showed that traders cut the probability of an October rate hike to roughly 60% after the economic data, from about 75% the previous day. Markets have fully priced in the Fed's next move in December.