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Traders still believe the Fed will cut by a quarter point in July, even after the blowout jobs report




Traders working on the floor of the New York Stock Exchange.

Drew Angerer | Getty Images

After a blowout job report, traders still believe the Federal Reserve will cut prices later this month, but less aggressively now.

The futures math money market now points to a 93.5% chance of quarter-point rate cut next month and a 6.5% probability of no rate change, 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 job report Friday. The quarterly betting odds were reduced by 70% before the report.

The tool is based on futures pricing from live markets and reflects the views that traders place on real CME exchanges.

In June, wages jumped well above expectations that the US economy added to 224,000 jobs, according to the Ministry of Labor. Economists who were investigated by Dow Jones, had expected profitable wage growth to rise by 1[ads1]65,000.

The strong figure came after Mays major disappointment with only 75,000 jobs added, raising doubts about the sustainability of the longest economic expansion in history. That May number was revised lower to 72,000.

"These are good numbers, but a price decline in July remains anything but inevitable," said Luke Bartholomew, investment strategist at Aberdeen Standard Investments. "Employment growth remains a bright spot among a rather mixed bag of American data, yet markets have come to expect a cut now, so it will fall out of bed if they don't get one. It gives the Fed some breathing space in the sense that it doesn't is an immediate need now to signal a significant intersection cycle. monetary policy easing after Fed leader Jerome Powell said the case for more accommodating policies has strengthened, and the central bank has also lost the word "patient" from the statement at its last political meeting.

Fed has a two-day meeting on July 30 until 31 July.



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