The August jobs report did more than lock in bets on a September rate cut: Traders now see a strong case for three quarter-point cuts through the end of the year.
Odds of three quarter-points in cuts through December spiked to 70.8% from 50.6% just prior to the jobs report, according to the CME FedWatch Tool. Odds of a full percentage point in cuts were at 1.5% from zero. Odds of a half-point in cuts this year were at 26.2% from 43.1% ahead of the report.
Odds of just one cut this year—which traders now see a 98.1% chance of happening on Sept. 17—were down to 1.5%. Traders now see a 1.9% chance of a half-point in cuts at the September meeting.