FOMC Key Takeaways with Craig of CME Group

The awaited Fed Interest Rate decision was released yesterday, and as expected, the Fed kept the interest rates unchanged while signaling that rate cuts could be on the horizon for the remainder of the year.

With this announcement, the equity indices initially broke to the downside and then were able to recover at the end of the session. Gold, Silver, and Crude Oil all traded lower today after seeing strong gains to start the week.

FOMC

The CME Fed Watch Tool has been moving today with the interest rate decision along with the volatility in different markets, and seeing the changes over time can be beneficial.

This morning at 9:00 A.M. Central Time, the tool was pricing in a pause for the June meeting with a 69% probability, and that figure went up to 76% as of 3:00 Central Time after hearing remarks from Powell.

In a similar way, the probability for a rate cut at the July meeting remained the same near 56%. What this tells traders is that the market is pricing in a higher chance of the first interest rate cut coming at the July meeting instead of the previous expectation of the June meeting.

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Craig Bewick has spent 25 years in futures and options markets, starting at CBOT and CME working in risk management, regulatory, technology, product management and client development.

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