Rate hike odds plunge after April jobs report badly misses estimates

April nonfarm payroll jobs up 160,000
April nonfarm payroll jobs up 160,000
Jobs 'lukewarm' report: Steve Liesman
Jobs 'lukewarm' report: Steve Liesman
Labor market tightening: Mark Zandi
Labor market tightening: Mark Zandi

The CME Group FedWatch probability for a June rate hike fell after the April jobs report missed estimates.

In April, the U.S. economy added 160,000 jobs, far below economist estimates of 202,000. Following the news the odds of a near-term rate hike plummeted, according to traders tracked by the CME.

Before the announcement, the market estimated a 10 percent chance of a June rate hike, but those odds now stand at 6 percent.

Job seekers stand in a line at a career fair in Chicago.
Nonfarm payrolls: 160K jobs added, vs expected 202K
US Treasury yields seesaw after big jobs report miss

Thirty-day fed funds futures prices are widely considered a reliable indicator of U.S. monetary policy changes. CME's FedWatch tool tracks the target rates based on fed funds futures contract prices.

A reading above 50 percent indicates the market's guess for the next rate hike.

After the announcement, the market pushed out its estimates for the next rate hike:

  • June: 6 percent chance
  • July: 21 percent chance
  • September: 36 percent chance
  • November: 38 percent chance
  • December: 53 percent chance
  • February 2017: 56 percent chance

At its March meeting, the FOMC projected that there would be two rate hikes this year, an estimate many in the market still doubt.