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Traders boost bets Fed to wait until June to start rate cuts

BY Reuters | ECONOMIC | 04/04/25 11:38 AM EDT

April 4 (Reuters) - Traders added to bets the Federal Reserve will wait until June to commence interest-rate cuts, as Fed Chair Jerome Powell said it's becoming clear that U.S. President Donald Trump's bigger-than-expected tariffs are likely to trigger both higher inflation and slower growth.

Trading in short-term interest-rate futures contracts put about a 45% chance that May will mark the start of reductions to the Fed policy rate, now in the 4.25%-4.50% range, down from a better-than-even chance seen earlier on Friday. Traders are now pricing short-term borrowing costs at 3.29% by year end. (Reporting by Ann Saphir)

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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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