CME FedWatch's September rate cut probability rises above 70%

Eren Sengezer FXStreet

The sharp fall witnessed in the Treasury bond yields following US President Donald Trump's surprise announcement of additional tariffs on Chinese imports starting next month ramped up the odds of one more 25 basis points Fed rate cut in September.

The CME Group's FedWatch Tool, which showed a 48% chance of a September rate cut following Fed Chairman Powell's neutral tone on policy outlook, was last at 72%.

"Trade talks are continuing, and during the talks the US will start, on September 1st, putting a small additional tariff of 10% on the remaining 300 billion dollars of goods and products coming from China into our country," Trump tweeted out, causing the 10-year T-bond yield to slump to its lowest level since November 2016 with a daily loss of more than 6%.

"This does not include the 250 billion dollars already tariffed at 25%," Trump concluded.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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