Traders Are Anticipating Another Rate Cut This Year
As the market continues to exhibit volatile behavior, investors are hoping that the Federal reserve will continue cutting rates in order to prevent another recession.
Some investors are worried that the weakness of the manufacturing sector is now affecting other sectors as well. This anxiety is stemming from the six-week low that the S&P 500 is currently near. Commodities have also begun to slide. Treasury yields are falling, demonstrating another sign typical of investors seeking to avoid volatility.
The possibility of a detrimental growth slowdown is what is assuring investors that the Fed will lower borrowing costs by cutting rates.
The current trends of a weak economy are said to be a result of the trade war between the U.S. and China. Economists believe that we will continue to see market volatility and a desire for rate cuts until there is a cease-fire on tariffs.
Federal-funds futures are used to make bets on what traders believe the future of monetary policy will be. Traders are currently pricing in on the belief that there is a 92% chance that there will be another rate cut by the end of the year. This is up from 66% on Monday.