Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Chances of Near-Term Fed Rate Cut Spike Higher on Virus Fears

EconomyFeb 24, 2020 07:43AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.

By Kim Khan

Investing.com - There is now more than a one-in-four chance that the Federal Reserve will cut interest rates next month, according to the fed funds futures market Monday.

Reacting to the sharp dive in equities and futures and the move to safe havens -- as fears of Covid-19 spreading globally increased -- investors bet that there is a much stronger chance the Fed moves quickly to provide support to the U.S. economy.

The chance of the Fed cutting interest rates by 25 basis points from the current range of 1.5% to 1.75% jumped to 26.6%, up from 11.1% late Friday and 6.6% the same time last week, according to Investing.com’s Fed Rate Monitor Tool.

There is also a more-than-50% chance rates will be lower in April. Traders are pricing in a 45.6% chance rates will be at 1.25% to 1.5% and a 10.8% chance they will be down to 1% to 1.25%.

As cases of Covid-19 jumped in Italy, South Korea and Iran, money has funneled into gold and Treasury bonds, pushing yields (effectively interest rate expectations) sharply lower.

Evercore ISI economists Krishna Guha and Ernie Tedeschi said in a note on Monday “it does not follow from this that the appropriate path of policy under the (virus) shock is unchanged," according to MarketWatch.

If new virus developments are “deeply concerning” the Fed could cut in March, likely by more than 25 basis points, they said.

The betting in fed funds futures is in sharp contrast to the rhetoric from Fed speakers that came last week, with most indicating that the current level of monetary policy looks appropriate for the rest of the year.

Atlanta Fed President Raphael Bostic said the coronavirus looked like a short-term issue.

“I have no impulses really to think that we need to do anything with our policy stance different than what we are today,” Bostic told CNBC.

Chances of Near-Term Fed Rate Cut Spike Higher on Virus Fears
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Andrew carson
Andrew carson Feb 24, 2020 12:39PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Powell the hawk will add to the downfall by holding.
taylor jason
taylor jason Feb 24, 2020 12:39PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
rates aren't exclusively set by Powell rather its voted on by 5 of the fed presidents each fomc meeting
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email