Fed funds futures traders are starting to take a post-July rate hike by the Federal Reserve more seriously on Wednesday, even before the central bank’s policy announcement comes out later this afternoon. Traders slightly boosted the likelihood that the fed funds rate target will get to at least 5.5%-5.75% or even higher by November to 40.4% versus 39.2% a day ago — after factoring in a widely-expected quarter-point rate hike today. Included in those calculations are a very slim likelihood that the Fed’s main interest-rate target could get to between 5.75%-6% or 6%-6.25% in four months’ time. Financial markets are trying to assess the Fed’s most likely path forward, given policy makers’ decision to pause rate hikes in June when inflation was trending higher than it is now. Treasury yields moved mostly lower in afternoon trading on expectations that the Fed will begin cutting rates in 2024.
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