Traders expect U.S. rate hike in June, shrug off weak payrolls data
Reuters
Published May 04, 2018 10:44AM ET
Traders expect U.S. rate hike in June, shrug off weak payrolls data
By Richard Leong
NEW YORK (Reuters) - U.S. interest rate futures rose modestly on Friday, as traders still expect the Federal Reserve to raise key borrowing costs at its June 12-13 policy meeting in the wake of weaker-than-forecast growth in domestic payrolls and wages in April.
Nonfarm payrolls increased by 164,000 last month, below the 192,000 gain forecast by analysts in a Reuters poll. Average hourly earnings grew 0.1 percent, less than the 0.2 percent increase expected by economists.
While these labor figures fell short of expectations, the jobless rate fell more than forecast to 3.9 percent in April, which was a near 17-1/2 year low. The March payrolls increase was revised higher.
Overall, the latest jobs data supported the case for the Fed to stay on its gradual rate-hiking path, analysts said.
On Wednesday, the Federal Open Market Committee, the central bank's policy-setting group, left its target range on short-term rates at 1.50-1.75 percent. It showed confidence inflation is closing in on the Fed's 2-percent goal.
"I think this does nothing to change the Fed," said Chris Gaffney, president of world markets at EverBank in St. Louis, Missouri. "It will hike in June. The economy is healthy but not overheating."
At 10:14 a.m. (1414 GMT), federal funds futures FFM8 FFN8 implied traders saw a 100 percent chance that the Fed will raise overnight costs for banks to borrow excess reserves from one another by a quarter point to 1.75-2.00 percent, CME Group's FedWatch program showed.
Fed funds futures FFU8 suggested traders priced in about a 71 percent of another quarter point hike in September.
Traders seem less certain about a fourth rate increase in 2018. Rates futures FFZ8 FFF9 implied nearly a 42 percent likelihood of such a move, according to CME's FedWatch.
Get The News You Want
Written By: Reuters
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.