Reply #26: US RATE FUTURES-Confident of another 50 bps Fed cut (yes - another rate cut!) [View All]

[UpInArms]

http://www.reuters.com/article/bondsNews/idUSN3130589220080131?sp=true

CHICAGO, Jan 31 (Reuters) - U.S. short-term interest rate futures extended gains on Thursday after weekly jobless claims spiked unexpectedly to the highest in over two years.

At the same time, the Federal Reserve's favorite inflation gauge continued to show prices running above the level preferred by many policy-makers in December.

Futures FFJ8 now show about a 90-percent implied chance that the Fed will slash benchmark rates by another 50 basis points in March, up from 40 percent late on Wednesday.

Another half-point rate cut would take the federal funds rate down to 2.5 percent.

"I think the Fed will stop at 2 percent," said Kurt Karl, head of economic research at Swiss Re in New York.

...more...