Expectations drop ahead of January interest rate cut
As U.S. bond yields rise on the back of President Trump’s victory, expectations for how aggressively the Federal Reserve will cut interest rates this winter are waning.
The federal funds rate, which determines the interest rate banks charge each other for overnight loans, is currently within its target range of 4.75% to 5.0%. At this point, it’s almost a foregone conclusion that the U.S. central bank will cut interest rates by a quarter of a percentage point (equivalent to 25 basis points) at its Thursday meeting.
According to the CME FedWatch tool, market prices currently indicate a 71% chance of another 1 in 40 rate cut in December. This compares to 77% on Wednesday and 72% a week ago. Probabilities of future interest rates in the CME FedWatch tool are derived from trading 30-day federal funds futures contracts.
Meanwhile, expectations for a rate cut in January have changed as a result of Wednesday’s election. The CME FedWatch tool notes that market prices currently support a January interest rate pause.
In fact, following rate cuts in November and December, the probability of another quarter-point rate cut in January is 29%, down from 41% on Wednesday and 45% a week ago. Meanwhile, the probability that the Fed will keep interest rates unchanged in January is 54%, up from 48% on Wednesday and 44% this time last week.
— Lisa Kailai Han
Check stock price movements after hours
Below are some stocks that make big moves in extended trading.
Lyft — This ride-hailing company soared nearly 20%. LSEG said third-quarter revenue was $1.52 billion, beating the consensus estimate of $1.44 billion. Fourth-quarter guidance beats Street expectations, with Lyft forecasting bookings of $4.28 billion to $4.35 billion, compared to FactSet consensus estimates of just $4.23 billion. I expected it to be.solar edge technologies — The maker of residential solar power inverters plunged 18% after third-quarter sales missed Street expectations.elf beauty — Cosmetics retailer stocks rose 11% after a better-than-expected quarterly report and higher guidance.
See the complete list here.
— Alex Harring
Stock futures little changed
Stock futures were nearly flat after 6 p.m. ET.
Futures tracking the Dow, S&P 500 and Nasdaq 100 were all trading slightly above flat. This comes after the previous session delivered a massive post-election rally in stock prices.
— Alex Harring
