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Traders keep bets on Dec rate cut after latest US economic data

BY Reuters | ECONOMIC | 11/14/24 08:48 AM EST

(Reuters) - Futures tied to the Federal Reserve's policy rate edged down after data showed wholesale prices firmed a little more than expected last month, though not enough to suggest traders have lost confidence that the U.S. central bank will cut short-term borrowing costs again next month.?

After the data, which showed producer prices excluding food and energy rose 3.1% in the 12 months through October, traders priced in about a 75% chance of a quarter-point interest-rate cut in December, versus more than 80% before the data. They also lightened up a bit on their expectations for rate cuts next year, pricing in no more than two further quarter-point hikes for the whole of 2025.

(Reporting by Ann Saphir; Editing by Christina Fincher)

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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.

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