Traders of federal funds futures saw a growing chance on Thursday that Fed policy makers will cut interest rates at their July 25-26 meeting. They are pricing in a 50% likelihood of the Federal Reserve cutting borrowing costs by at least a quarter of a percentage point in two months’ time, up from 42% on Wednesday. Such a move would bring the fed funds rate down to a range of 4.75% to 5%, after accounting for a pause by the Fed in June. Regional-banking concerns were back in focus again after PacWest Bancorp said it lost 9.5% of deposits during the week that ended May 5. Treasury yields were broadly lower in morning trading, led by a drop in the 2-month T-bill rate, after Thursday’s producer price data for April provided the latest evidence that inflation in the U.S. is now moderating.
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