US rate cut bets fall below 50% after Fed Governor Waller says he prefers steady rates if inflation stabilizes
Traders slashed odds of a Federal Reserve rate hike to 50% following Governor Christopher Waller's remarks. Global bond markets found temporary relief, though yields remain pressured by geopolitical risks.
World bond markets and shares moved higher on Friday after Federal Reserve Governor Christopher Waller suggested the central bank might hold rates steady if recent data confirmed disinflation trends. In remarks at a Reuters NEXT event, Waller stated he would support keeping the federal funds target rate unchanged if inflation pressures continue to ease over the next two weeks. He added that a rate hike would be supported if inflation fails to moderate. Following his comments, money markets adjusted instantly; the probability of a Fed rate hike this month dropped to 50 per cent from approximately 63 per cent a day earlier.
The shift occurred as global bond yields rose amid concerns over stubborn inflation, high government debt, and geopolitical tensions including the Iran war. These factors drove long-dated yields to multi-year highs. Consequently, the US dollar retreated, contributing to a weekly rise of nearly 2.3 per cent for the Japanese yen, its best performance since late July. Nasdaq futures climbed 0.4 per cent while S&P 500 futures rose 0.1 per cent as traders braced for the US August payrolls report due later that day.
