50-basis-point cut back on table after media reports
The dollar fell on Friday to its lowest this year against the yen and gold hit a record high after a dramatic overnight shift in investor expectations for a super-sized Federal Reserve interest rate cut next week.
“I’ve been firmly in the 25-basis point camp until now. This is actually making me think they might go 50,” City Index market strategist Fiona Cincotta said. Benchmark 10-year Treasuries rallied, pushing yields down 4 basis points to 3.638%, while rate-sensitive two-year yields dropped 6.3 bps to 3.585%.
“Current market pricing is aggressive compared to the average FOMC rate cutting cycle outside of recessions. We, along with the consensus of U.S. economists, do not expect the U.S. economy to enter a recession.”
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