US futures pricing for a September Fed rate increase fell sharply following softer-than-expected payrolls figures last week.
US interest rate futures now imply a 44% chance of a Federal Reserve rate hike in September, down 10 percentage points after Friday’s mixed nonfarm payrolls report. The data showed a cooling but stable labor market, with no signs of sharp deterioration despite weaker participation rates.
Economists expect July’s consumer price index to rise 0.15% month-over-month, reversing June’s 0.42% decline, while core CPI is forecast at 0.26%. Producer prices are also projected to increase modestly, with attention shifting to Wednesday’s CPI release for further Fed policy clues.
The repricing reflects market expectations of a more dovish Fed stance, though upcoming inflation data could still sway September’s decision.