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Traders see stronger chance of more Fed rate cuts this year

BY Reuters | ECONOMIC | 04/02/25 07:17 PM EDT

April 2 (Reuters) - Traders on Wednesday added to bets the Federal Reserve will cut interest rates at least three times this year, with a fourth rate cut by year's end an increasingly less far-fetched outcome, after U.S. President Donald Trump announced broad-based tariffs that were higher than many analysts had expected.

U.S. short-term interest rate futures late on Wednesday reflected expectations the Fed will deliver a first quarter-point reduction to the policy rate in June, followed by similar moves in July and October, and put about a 45% probability that Fed will have delivered an additional cut by its December meeting. (Reporting by Ann Saphir; Editing by Sandra Maler)

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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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