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Traders keep bets on 25 bps Fed rate cuts in Nov, Dec

BY Reuters | ECONOMIC | 10/11/24 08:44 AM EDT

Oct 11 (Reuters) - The case for quarter-point U.S. interest-rate cuts at upcoming Federal Reserve policy meetings appeared intact on Friday after a report showed producer prices were unchanged last month compared to the prior month, suggesting inflation continues on track toward the Federal Reserve's target.

Futures contracts that settle to the Fed's policy rate continued to imply only a 15% chance that the Fed will leave its target for short-term borrowing costs in the current 4.75%-5.00% range when it meets in early November, with the bulk of bets on reductions in each of the last two meetings of this year and for the each of the first several meetings of 2025, to be in the 3.50%-3.75% range by the middle of next year. (Reporting by Ann Saphir; Editing by Toby Chopra)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.

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