An upward revision of U.S. gross domestic product growth in the second quarter has led speculators to reconsider their bets on a substantial 50-basis-point rate cut next month.
This adjustment comes as the market eagerly anticipates the release of the Personal Consumption Expenditure (PCE) price index – the Fed’s favorite inflation report – scheduled for 8:30 a.m. ET Friday.
The U.S. economy grew at an annualized rate of 3% in the last quarter, according to the government’s second estimate, which revised earlier projections of 2.8% growth.
The increase was largely driven by household spending, which was also revised upward from 2.3% to 2.9%. This strong boost in GDP, alongside recent jobless claims that showed no significant cooling in the labor market, has caused traders to slightly scale back their expectations of a larger rate cut from the Federal Reserve.
Traders Start To Question Need For Large Rate Cuts
The market-implied probability of a 50-basis-point rate cut has ...