Swap contracts show that the probability of the Federal Reserve cutting interest rates by 50 basis points this week has exceeded 50%

Bond traders again believe that Federal Reserve policymakers are more likely to cut interest rates by 50 basis points than 25 basis points at this week's meeting. Swap contracts tied to the Fed's interest rate decisions show that the Fed has a more than 50% chance of a 50 basis point rate cut this week, compared with last week when traders almost completely ruled out the possibility. This has brought the two-year U.S. yield back to its lowest level in two years and dragged the dollar index to its lowest level since January. Philip Marey, senior U.S. strategist at Rabobank, wrote that he expects the Fed to implement a standard 25 basis point rate cut. "Powell's lack of guidance may indicate that the FOMC has not yet reached a consensus. More importantly, retail sales on Tuesday may still change market expectations." (Jinshi)