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Traders edge up bets on earlier Fed rate cut after inflation data

BY Reuters | ECONOMIC | 08:38 AM EST

Jan 13 (Reuters) - Traders on Tuesday boosted bets the Federal Reserve may ?not wait until Fed ?Chair Jerome Powell's term ?ends in ?May before ?cutting interest rates again, ?after ?the Bureau of Labor Statistics reported underlying ?consumer ?prices rose ?a bit less than expected last month.

Traders ?still think a June cut, after Powell is no longer chair, ?is ?the most likely outcome, but ?following the data priced in about a 42% chance of an April cut, up ?from 38% before the data.

(Reporting by Ann Saphir; ?Editing by Andrew Heavens)

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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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