After a blowout jobs report, traders still believe the Federal Reserve will cut rates later this month, but less aggressively now.
The fed funds futures market is now pointing to a 93.5% chance of a quarter-point rate cut next month and a 6.5% probability of no rate changes, according to the CME FedWatch tool. Traders were pricing in a 30% chance of a half-point cut in July before the release of the jobs report Friday. Odds for a quarter-point cut were 70% before the report.
The tool is based on futures pricing from live markets and reflect the views of traders placing real bets on the CME exchange.
Payrolls jumped in June well above expectations as the U.S. economy added 224,000 jobs, according to the Labor Department. Economists surveyed by Dow Jones had expected nonfarm payrolls to rise by 165,000.
The strong numbers came after May’s big disappointment of only 75,000 jobs added, which raised doubts about the sustainability of the longest economic expansion in history. That May…