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Federal Reserve

Odds for a Sept rate hike drop after jobs report misses expectations

151K jobs enough to move the Fed?

The CME Group FedWatch probability for a September rate hike dropped after the August jobs report missed expectations.

Nonfarm payrolls came in at 151,000 for last month, below economist predictions for 180,000.

Traders tracked by the CME now see about a 21 percent chance of a September rate hike. They gave it a 27 percent chance before the report, but the expectations dropped as low as 12 percent after.

Before the jobs report, the market estimated a 57.6 percent chance of a December rate hike, but those predictions, which dropped as low as 51.2 percent, now sit near 56.1 percent.

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 jobs report, odds dropped in all months tracked by the CME, but have since bounced back:

  • September: 21 percent, down from 27 percent prior to the 8:30 a.m. ET report.
  • November: 29.2 percent, down from 31.6 percent
  • December: 56.1 percent, down from 57.6 percent
  • February 2017: 59.7 percent, up from 59.3 percent
  • March 2017: 63.2 percent, down from 64.8 percent
  • May 2017: 64.8 percent, down from 66.2 percent
  • June 2017: 69.6 percent, down from 70.8 percent
  • July 2017: 71.3 percent, down from 72.4 percent