Expectations that the Federal Reserve will start dropping interest rates have surged in recent days.
Traders are betting the Fed will bail them out again. If they’re wrong, things could get ugly.
Expectations that the Federal Reserve will start cutting interest rates have surged in recent days, and the Fed funds futures market suggests a better than 50-50 chance that the central bank will announce a cut at its meeting in July.
In early May, those odds were below 20 percent. Additionally, if investors who bet on such things have it right, more rate cuts could follow.
This stark change in expectations coincides with a deterioration in the outlook for growth, after a month of worsening trade relations and slumping stock markets.
The stakes are high. Throughout the decade-long bull market, stock investors have repeatedly taken their cue from the Fed’s interest rate decisions, which have infused fresh life into stocks.
