Traders Maintain Bets on 2019 Fed Easing After FOMC Minutes

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(Bloomberg) -- The amount of U.S. central-bank easing priced in by the futures market for this year was little changed following the release minutes of the Federal Reserve’s most recent policy meeting.

January fed funds futures indicate a rate of 1.49% at the end of 2019, having indicated 1.485% just before the release Wednesday of the Fed’s account of its July 30-31 gathering. With an effective fed funds rate currently at 2.13%, that implies almost 65 basis points of reductions this year from Federal Reserve boss Jerome Powell.

Federal Reserve officials viewed their interest-rate cut last month as insurance against too-low inflation and the risk of a deeper slump in business investment stemming from uncertainty over President Donald Trump’s trade war.

Fed funds futures indicate more than a quarter point of easing priced in by the end of September and a full percentage point by the end of August next year.

The U.S. 10-year yield maintained its advance from earlier in the session and was up 0.5 basis point on the day at 1.56%. The dollar was little changed on the day.

©2019 Bloomberg L.P.

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