Chances of Fed Rate Cut Jump as Slowdown Worries Rise
Published Jan 03, 2019 12:17PM ET
Investing.com - Apple’s profit warning isn’t just affecting stocks, it’s spilling into interest rate expectations, with markets now pricing in increased chances of a rate cut this year.
At the end of the year all the talk was about how long the Federal Reserve would pause before it hiked rates again. Now cuts are on the table, according to fed funds futures.
The chance of a rate cut at the May FOMC meeting jumped to 15.7% today from just 3.1% yesterday, according to Investing.com’s Fed Rate Monitor Tool.
There is actually a 1% chance of two cuts priced in for that month, whille there was no chance of that priced in the day before.
Looking out into the year, there is a more than 30% chance that interest rates will be lower in October. And while chances rates would be higher in October stood at more than 20% last week, they are at 0% now.
For long-term Treasury rates, the U.S. 10-Year yield sank to 2.58% in midday trading, off more than 3%, putting it at levels not seen in a year.
Money rotated into bonds, pushing prices up and yields down, as it poured out of equities following Apple’s warning on the revenue for its latest quarter.
Apple (NASDAQ:AAPL) blamed emerging markets and China specifically, increasing worries that the trade war between the U.S. and China is now eating away at corporate profits.
Those fears were exacerbated this morning when White House economic adviser Kevin Hassett told CNN that a “heck of a lot” of U.S. companies would be downgrading earnings until a trade deal between the two countries was struck.
Get The News You Want
Written By: Investing.com
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.