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US rate futures price in more easing in December and in 2025 after Fed cuts rates

BY Reuters | ECONOMIC | 11/07/24 02:29 PM EST

NEW YORK, Nov 7 (Reuters) - Futures on the federal funds rate, which measure the cost of unsecured overnight loans between banks, priced in on Thursday another 25 basis-point (bps) rate cut next month, after the Federal Reserve lowered rates by the same magnitude at the end of its two-day policy meeting.

Rate futures also implied another 67 bps of reductions for 2025, LSEG calculations showed. (Reporting by Gertrude Chavez-Dreyfuss Editing by Chris Reese)

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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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