Traders cool to summer U.S. rate hike view after weak jobs report

[June 03, 2016]  (Reuters) - U.S. short-term interest rate futures contracts rose on Friday after a government report showed U.S. employers added fewer jobs in May than expected.

The price of futures contracts tied to the Fed's benchmark policy rate moves inversely to the rate that traders expect at any given point in time, and the increase suggests traders are trimming bets the Fed will raise rates this summer.

Traders now see a bigger chance the Fed will wait until September to raise rates, and will not increase them a second time in 2016.

Before the jobs report, traders saw a 19 percent chance of a June rate hike and a 59 percent chance of a July rate hike, with some chance of a second rate hike by December according to analysis by CME Group, where the futures contracts are traded.

(Reporting by Ann Saphir; Editing by Chizu Nomiyama)

[© 2016 Thomson Reuters. All rights reserved.]

Copyright 2016 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.