On November 20, after the U.S. Bureau of Labor Statistics announced it would not release its October jobs report, traders anticipated that the Federal Reserve was more likely to pause interest rate cuts at its December policy meeting.
A sell-off occurred in the federal funds futures market after the U.S. Bureau of Labor Statistics confirmed there was insufficient data to release the report. Traders reduced their expectations for a 25-basis-point rate cut at the December 10 meeting. They now expect the Fed to keep the benchmark rate in the 3.75% to 4% range. The swap market, which links to the Fed's policy rate, is currently pricing in only a 6-basis-point rate cut at the December meeting, and only a 19-basis-point cut by January.
Prior to Wednesday, the swap market was pricing in 11 basis points, implying a roughly 50/50 chance of a Fed rate cut within three weeks. Leah Traub, portfolio manager at Lord Abbet, stated, "We already knew there wouldn't be October's unemployment data, but the November data won't be released until after the Fed meeting, which should be disappointing news for the market. Given the division within the Federal Open Market Committee, this reduces the likelihood of a rate cut." (Jinshi)
